No matter who you are, you might be feeling a little strapped for cash the way things continue to develop with the economy. Even if last year you were living pretty comfortable, this year you might finally be feeling the recession that we continue to be in. So it might be time for you to start living a little bit different and try and make it so you are debt free. You will find that life gets a lot easier when you don’t have a bunch of debts to be worried about. Below are seven steps in which you can help yourself become free of debt.
1. The main key here is to start spending less and make sure that you are definitely spending less than what you make each month. So the number one step here is to make sure that you immediately find a way to cut down on your spending. Spending too much is what got you into debt in the first place so it’s important that you change this part of your lifestyle right away.
2. The second thing you will need to do is to make yourself a budget. A lot of people hate the word budget because it makes them think this is going to restrict them, but actually if you make a budget and stick to if you are going to unlock the financial handcuffs that you currently find yourself in. Your budget can be very simply where you just make a list that consists of how much money you make every month and then list all the different monthly expenses that you have. You then just subtract all the monthly payments from your monthly income and you will see if your end number is positive or negative. If you find that you are spending more than you are making then this will give you the opportunity to see where you can cut some corners in order for you to at least break even if not actually end up with some money left at the end of the month.
3. The third step is to start reducing your expenses. Like a lot of people you may be living from check to check each week and you don’t think that you are wasting any money doing it this way. If you think that is true, you might be lying to yourself. To figure it out, for one week write down all the things that you spend money on, this means even if you buy a pack of gum for fifty cents. It will all add up in the end. At the end of the week add up all that was spent during that week and multiply that by 4. This is a good way to see where you might really be wasting money and you should be able to reduce some of the spending if you really know what you are spending it on.
4. The fourth step is to try and make extra payments on things. Remember, you are trying to get debt free here so you need to make an effort. So, when you cut out unnecessary spending you should be freeing up some cash. With that extra cash then you should increase the payment amounts on something you want to get paid off quicker.
5. The fifth step is to pay off all things that have the highest interest rates first. Make it a conscious effort on your part to get rid of those nagging credit cards that are killing you with all their insane high interest rates. If you pay the higher interest rate cards off first not only are you lifting a huge burden off your shoulders but you are opening the door to be able to pay the next card off.
6. The sixth step is to now look at your debts and decide which the next debt should be that you pay off. This is called rolling your payments. Remember, each time you pay something off you are getting more money left out of your paycheck and you will be able to pay off more bills with that extra money. Don’t think because you are starting to see extra money each month that you can keep it and spend it on yourself. You are not at the stage yet where you can do this. The more and more you increase payments on other debts the faster and faster you will notice they are getting paid off.
7. The seventh and final step is probably the most important one of all and that is to stick with the plan. In order for you to get debt free is if you stick with your plan to pay off your debts so that you can free up your cash flow. When you get in a habit of doing this and sticking with it, not only will you be reducing your debt you will also be reducing the stress that comes along with the pressure of debt.