Do you find yourself lying awake at night stressed over how to pay your bills? Have you become consumed with a volume of debt and are feeling helpless about how to come out from under it? While you can’t change how it happened, you can develop strategies to eliminate it and put measures in place to ensure it does not reoccur. It is not always easy to live within your means given mounting medical bills, student loans and the general expenses of day to day living. If you have a goal to eliminate your debt, the only way you will succeed is to develop a detailed plan of attack and commit to executing it. Living debt free means living a more relaxed and stress free life. Take these basic strategies from the financial professionals and put them into action. There is no better time to start than today.
The first step is to list all of your debts, minimum monthly payments in descending order with the lowest balances first ending with the obligations that have the highest balances. Total each of these columns. (Do not include your mortgage payment.) You cannot begin to eliminate your debt if you don’t know exactly how much you owe. The only way such a plan can succeed is for you to commit to not accumulating any additional debt.
On a separate sheet, notepad or spreadsheet, list all of your fixed monthly expenses. This list should include mortgage and property taxes, insurance and utility payments as well as phone and internet expenses. Subtract this total from your monthly net, take home, income. From that number, subtract the total of the minimum monthly payments on your consumer debt obligations. The remaining funds are the amount you have for discretionary spending each month. It is from this amount that you will begin to pay down the consumer debt balances. Accomplishing this will no doubt cause sacrifices and anxiety, but commit to it knowing the reward at the end of the process.
Rethink your necessities. Extravagant gifts, frequent dining out and designer coffee are a thing of the past. Your number one short term goal is to direct a greater portion of your discretionary spending to first paying off the consumer debt with the lowest balance. You will begin to quickly see progress. Identify the date by which you intend to achieve the payoff of the lowest balance, divide the balance by the number of paychecks between now and that date and this is the amount to direct toward that debt each month. When shopping is a necessity, take advantage of the awesome deals offered by Groupon coupons and shops the terrific sales at Old Navy. Another option for accelerating the pay-off of consumer debt is to secure a part time job and direct all of the earnings from the job to debt reduction. Make choices and make sacrifices to achieve your goal. You will never, ever regret being debt free. Best of luck on your journey!