Helping You Avoid Life's Financial Mistakes

10 Tips To Know If You Are Mentally Prepared To Get Out Of Debt

February 23, 2009 By 1 Comment

Are you ready to get out of debt?

You have your budget put together, you know how much extra spending cash you left to work with.  You have your debt plan together and know how your going to pay off your debt.  Finally you even have a emergency fund set up to sock a few bucks away.

But are you really ready?

Are you mentally prepared to make one of the toughest financial journeys in your life?  If this has got you a bit stumped here is a list of things you may want to ask yourself to see if you’re really mentally prepared to make that financial leap into the unknown.

  1. Can You Handle The Temptations.  When you go to the store or shop online can you handle the mental temptations that are screaming in your head telling you to buy this or that.  You know what I’m talking about that little voice in your head that says, ” I would really like to buy that.”  I know these are tough to talk yourself out of but if you can’t break this mental cliff getting out of debt may not be in the cards for you.
  2. Can You Handle The Peer Pressure.  Can you handle when the sales person across the counter is trying to talk you into something you really don’t need.  If a sales person calls you on the phone do you have the power to say NO.  If your easily purswayed to buy something you need to break this mental pressure point before it crushes you.
  3. Can You Stay Focused.  Can you keep your attention on this plan to get out of debt long enough to actually succeed.  Can you keep your focus or do you easily get swayed in other directions.  If this sounds like you, you may have to look into ways so you can stay focused.  Without focus and that ability to think long term about your situation you will always keep falling back into old habits that will get you into financial trouble.
  4. Can You Stay Patient.  Getting out of debt takes time, lots of time.  It’s not a fix and forget type of situation.  You need stay patient long enough at least to see that things are working.  If you just started your plan to get out of debt 6 months ago and haven’t seen much in the way of results and you’re considering quitting, DON”T!  A debt plan can take anywhere from a year to several years to complete. 
  5. Can You Handle Things If They Get Out Of Control.  If you’re in the middle of your plan to get out of debt and an unexpected debt comes up such as your water softener goes out are you going to be able to handle the situation.  This happened to me once on Christmas which made it really hard to deal with.  I had my water softener go out and it was going to be a $1000 buck to fix it.  Luckily we could pay for it but it took about everything we had to do it.  This left us with a not so great Christmas but we managed.
  6. Can You Handle What Others Are saying.  Are others talking about you behind your back.  This is just one of the side effects of getting out of debt.  It may be your friends, family, heck it may even be your own spouse.  The point here is that you have to work past all of this.  In fact my wife had little confidence in me that we could solve most of are financial issues but I just looked past all of it and kept on working at it.  Once she seen that we had more money showing up in are bank account her belief level started to rise and what was once a sore subject to talk about is now an easy subject to talk about.
  7. Can You Handle The Stress.  Getting out of debt can have a very stressful effect on you.  In financial services I remember seeing people dealing with huge amounts of stress.  In fact I even had one particular lady break down and start crying right in front of me because she was in so much debt.  The stress had literally consumed her.  This is why I always recommend rewarding yourself once you pay off a debt.  Happiness relieves stress.  Maybe not all of it but you need a way to relieve your stress so you can at least stay halfway sane.
  8. Can You Keep Your Word.  Doing what you say you will do is very important, especially if it’s keeping a promise to yourself.  Sometimes just being able to keep a promise that you will do something is all that stands between you and getting out of debt.  Can you keep your word to others.  If you have a tough time doing what you said you will do this may lead to people loosing trust in you. 
  9. Are You Willing To Ask For Help.  A lot of us like to be the do it ourself type but you need to be prepared to ask for help.  This may be talking to a friend or family member or maybe somebody more professional like a financial planner, or someone who does debt consultations.  Sometimes this is all you need to get back on track.  I know what your thinking I can handle my own situations.  The truth is that’s not always possible.  One last point asking for help also speeds up the process.  If you are looking for a way to get out of debt a little faster this is your best route.
  10. Are Willing To Except Your Mistakes.  Are you willing to forgive and forget.  Sometimes we like to hang onto old financial mistakes we made many years ago and let them burden us with guilt.  For example I bought a timeshare which I thought was a great idea at one time ended up being a financial disaster.  I sunk thousands of dollars into something I simply didn’t want.  In the end I sold the timeshare back to the company I bought it from and had to except the loss and the terrible mistake we had made and move on with are lives. 

Are You Prepared?

If this sounds like a lot to think about don’t get to worried about it.  You may or may not be making all of these mistakes.  If fact you can tell which ones I’ve made because I had examples to go with them.  If you have a budget and a plan all you need now is some simple mental motivation to keep going. 

If you are making some of these mistakes write them down and write out how you would go about solving them.  What would be your next action step to solving these mental road blocks?  Write it down and start taking action immediately.  Sometimes all you need to do is take that first little step to get your mentality on the right track. 

To a debt free life,

Chris

This post was recently featured on The Carnival of Money Hacks by The Penny Daily.

Filed Under: Debt Managment Tagged With: ,

How To Get Out Of Debt With A Home Based Business

January 29, 2009 By 1 Comment

Getting out of debt is not always an easy thing to do.  Everyones situation is different.  It may be to much debt, bad credit, or even not enough money.   This is what I want to discuss in this post.  Using a home based business to get out of debt.

What Home Based Businesses Have To Do With Getting Out Of Debt

First off you may be thinking how is starting a home based business going to help me get out of debt.  Though I feel they really go hand in hand.  Don’t get me wrong starting a business takes time to grow especially a home based business. 

So making money will not be an instant thing here but once it has been established it can be a constant stream of income that will do two things for you.

  1. Get you out of debt.  It will help you with your debt payments and give the extra cash needed to get it done faster.
  2. It will diversify you income.  If you already draw two incomes in your house hold having extra income based off of your own home based business will protect you if their is that odd chance of getting laid off.

Next, start a business.  This may sound fairly simple but the real question is what business should you start.  That is all really all up to you and what you like.  Whether it be an online business, MLM, or some type of private venture you wish to start on your own.  However I will make one suggestion.  Start a business with minimal cost involved at first.  This way if you do fail you won’t lose much. 

Third, get rolling.  Don’t waist time and make up your mind that you’re going to do it.  Even if the business does go belly up you won’t lose much.  At this point this is usually were most people will fail.  Most won’t be able to make a decision and make up excuses to why they can’t start now. 

You may say I don’t have much money or this weeks just a bad time maybe next week.  Whatever you do don’t do it.  Don’t listen to that negative voice telling you can’t do it.  Keep your mind focused on starting a home base business and getting out of debt.

Fourth,  once you do have an income from your business how much are you going to use to pay down your debts.  I recommend only using 50% to 75% on debt payments.  The reason I suggest this is because, one you should save some money that you make to keep the business running and two you don’t want to become to dependant on this money.  If things don’t happen to work out you may need the income from your job to cover your debts.

Finally, you’ll want to get a business savings fund started.  As I mentioned in the last step you’ll want to save a portion of your money back for keeping your home based business running.  Getting out of debt takes time and so does building a business.  Why not spend time doing both and kill two bird with one stone.

Is This A Unique Way To Get Out Of Debt

This may sound like an odd way to get out of debt by starting your  own home based business but really this is what stumble forward is all about, showing simple and unique ways to get out of debt.

Last but not least watch for future post on which home based business ideas I like and how you can get started in them right away.

To your businesses success,

Chris

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Could This Be The Next Depression?

January 20, 2009 By 1 Comment

Hey everyone just got done reading a personal newsletter from Paul Dietrich.  If your not familiar with him he is the one of the top financial professionals in the U.S.  He is one of the top owners of Foxhall Capital and has written many articles for the Washington Post.

I’ve also had a chance to meet Paul and few of his close associates and hear what they have to say about the economy and so far he is on target.  Everything he has told me over the last year has been true thus far.  So when I get one of his personal newsletters I treat it like gold.

I must also mention that Paul is a professional investment adviser as well as at forex trading.

What we have faced so far.

  • Currently the average fund has lost 48% according to the Washington Post.
  • Trillions have been lost in 401k and IRA accounts.  This doesn’t count the trillions lost in non-pension assets.
  • The trillions lost in the real estate market, and the above average foreclosures all across the U.S.
  • The Dow having it’s worse losing streak since 1931.
  • The S&P 500 being down nearly 40% in 2008.

With all those things and a national deficit in the trillions what can we expect for 2009?

What’s up for 2009?

As far as Dietrich is concerned they expect more of the same for 2009, and that is what I am projecting as well.  We can’t expect this mess to go away overnight.  Though with some tough times still ahead we will make it through.

However don’t expect it to be another depression.  Even with things as bad as they are I am guessing 2010 will be the comeback year however this is only a guess at this point with unemployment at almost 8% it will take some time for this to work itself out.

How is this going to effect you?

If you haven’t started looking for a way to cut down your debt now is better than later.  My best suggestion is to cut down as much as you can and sock away as much as you can.  Just cause 2008 is over and we have a new president in the White House doesn’t mean things are about to get better.

Also once things do start to turn around don’t loosen your grip and get lazy with your finances again.  I learned this from the last recession we had.  This is a typical thing that happens when we get through the tough times.  We tend to let loose and forget about what just happened.

Stick with your plans even when the worst is over and get prepared for the next ression.  Even though it may be a few years or even a decade or two till the next one the point is by staying prepared you’ll be ready for the next one whenever that may be.

To getting debt free,

Chris

This post was recently featured on The Carnival of Money Hacks by Little Miss Know It All.

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10 Rules To Staying Debt Free Forever

January 19, 2009 By 15 Comments

Recently I’ve been reviewing my current debt plan and have noticed that I’ve needed to enforce a few rules.  Not because of any one person but more for myself.  With rules in place as guidelines to keep me on the right path, achieving my goals will have better odds of success.

Here are the rules I’ve set for myself.  Yours may be different but after reading this post let me know what you would add or take away and leave a comment below.

10 Rules To Staying Debt Free

  1. Credit cards must be paid in full every month. I’ve fallen into this trap before were I say I’ll just pay it off next month and guess what it don’t happen and then another month goes by and another till finally you have so much debt on your credit cards you can’t add anymore.
  2. I must hold to a set budget every month. Budgets come in handy just letting you know where your money is going every month.  Without knowing where your money is at you can run the risk of having money begin wasted in places you don’t want. I’ve talked about this in past articles you can see here.
  3. Any purchases made outside the budget must be within are cash flow left in my budget. For example if I decide I want to buy myself a new guitar and it cost $500 then their needs to be at least $500 left in my budget.  However if there isn’t I can’t purchase the guitar.
  4. Any purchases made outside the budget must be agreed upon by both spouses. This rule is really used as a way to stop myself from making a bad mistake and getting the opinion of someone else before I buy.  If you aren’t married then make it a rule to get the opinion of a close friend or family member before you buy something out of your budget.
  5. Dining out or any other entertainment activities must be paid in cash. These types of activities have a way of stacking up on your credit card.  I’ve personally fallen into this trap of paying for meals with my credit card.  Instead use your spending cash you’ve budgeted for yourself on a weekly basis.  This will help by keeping some restraints those activities.
  6. Spending cash is set at a fixed amount and never any more. I’ve learned over time that have a fixed amount of spending cash makes you more cautious about how and where you spend your money.  If you are use to just pulling cash off your debit card or swiping your credit card this will be a habit you should break immediately.
  7. The first person I pay is myself. Getting out of debt is one thing but staying their is another.  If your not taking preventive measures to stay out of debt then their may be a good chance you will fall back into debt.  Having an emergency fund set aside were you can contribute on a regular basis will help in those times were unexpected surprises may show up.
  8. All debts and bills must be paid on time. Paying your bills on time is not only a good practice to keep up but also may have some negative results on your credit report.
  9. Once the debt plan is in place it can’t be changed. By sticking to the plan and not making changes you have a better chance to success.  I’ve also learned that by changing it whenever you want will always give you that out when you don’t want to stick to your debt plan.
  10. Always look for improvement. When your trying to get out of debt you have to look for all the breaks you can get and save money were you can.  Look over your credit card statements and other bills such as your cell phone and look for ways you can cut cost.  Staying up to date on the best ways to save is always a good habit to have.

What Are Your Rules

So now with that said, do you follow the rules or don’t you?  Feel free to share how you handle your debt situations and what rules you use to get debt free.  Also if you know of any rule that should be added feel free to leave a comment below.

To getting debt free,

Chris

This post was on The Carnival of Personal Finance #189 hosted by Taking Charge.

Filed Under: Debt Managment Tagged With: , , , ,

How Pain And Pleasure Effects You Getting Debt Free

December 26, 2008 By 5 Comments

In life their are two things that control what we do for any reason.  The first is PAIN, the things we don’t want to do and the second is PLEASURE the things we do want to do. 

Recently I was reading a great book about this subject by Anthony Robbins, “Awaken the Giant Within.”  He talks in greater length about this in his book but that entire section made me realize how much pain and pleasure have everything to do with getting you out of debt or being in debt for the rest of your life.

Today’s post is about facing your pain of being in debt to achieve pleasure by becoming debt free.

How Pain And Pleasure Control You And Your Debt

Pain and Pleasure all happen because of one reason, a decision, and that decision either leads you down a road of pleasure or pain.  However here is the problem.

We as human beings are geared towards pleasure.  Everything we do is to stay away from pain.  However is it always the right way to do things?

Although, we are looking for the easy way out especially when it comes to getting out of debt and in the short term things may look good but in the long term we may face some even bigger challenges.  Getting debt free is all about associating pain and pleasure the right way. 

Here’s a simple example about what I mean.

Lets say you don’t like to brush you teeth because in the morning your to tired or at night before you go to bed you just want to go to bed.  Now in the short term you have gained pleasure because your to tired to brush your teeth but in the long term you may cause some even bigger challenges for yourself by not brushing say tooth decay, a root canal, or worse dentures. 

So just cause you take the short term pleasure doesn’t mean their will be some long term consequences.  Now let me give you an example of how this might happen if your trying to get out of debt.

Lets say you want to put a debt plan together so you can finally get on the right track, but this month you have some unplanned bills coming through and you decide to wait until next month.  You literally talk yourself out of it for that month and decide I’ll do it later and then another month goes by and another month till finally you have so much debt that you have to get into a debt counseling program, or a debt negotiation program, or worse file for bankruptcy.

Again you pushed off getting a debt plan together something you could have done on your own and now you need to take more drastic measures.  All because you decided in favor of the short term reward and not the long term pleasure. 

Does this sound like you? 

How To Use Pain And Pleasure To Get Debt Free.

The simplest way to get debt free is changing the way you associate pain and pleasure.  For example if associate just trying to forget about your debt problems that mean you are associating pleasure for not setting up your debt plan.

However if you would associate thoughts of, ”if I don’t setup my own debt plan now I will have to go into a debt negotiation plan or worse bankruptcy,” you would associate pain with not setting up the debt plan and do it immediately.  Then every time you think it’s a pain to get out of debt you can think of the long term pain it would cause you.

Though this may come at a great cost to you.  Sometimes before most people take action is when it’s to late.  It’s finally come to the point that you must do something or their will be a big price to pay, say foreclosure or bankruptcy.  The pain has dramatically increased and now you need to do something or else. The pleasure of putting it off is not their anymore.  This is when most people decide to act however you don’t have to wait till it comes to this. 

So you might be asking how get started? 

Their are plenty of ways to do so but finding an inspiring and moving way would be the best.  For example if you know someone or people who’s in bankruptcy or even better homeless visit them and think about how life would be if you didn’t get your act together.  Seeing someone going though this kind of pain can have a huge effect.

I once heard of a guy who didn’t want his kids to do drugs and wanted them to learn why they shouldn’t take drugs and the effects they can have on you.  So he knew of a place where they rehabilitated drug attics and decided take his kids on a tour of the place.  The sites were unspeakable.  Though terrible it worked.  The children’s fear was permanently ingrained in their thoughts and every time someone tried to offer them drugs the images of those people going through rehabilitation came to mind.

The mind is a powerful force.  In the end setting up a debt plan may cause you to endure a little pain but it’s minimal to the pain you could potentially face down the road by just giving up a little pleasure now. 

Want to save yourself form financial pain sign up for my RSS and get back on track today.

This post was featured in the Money Hacks Carnival by Cash Money Life.

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Free Debt Managment Tools For You

October 15, 2008 By 2 Comments


A Great Tool For Anyone Who Wants To Get Out Of Debt

I recently came across this wonderful new tool to help those that would like to put there own debt plan together.  I’ve been playing around with it and found some very useful functionality.  This tool comes thanks to Vertex42.

First off you will want to download the tool which when downloaded can easily be opened in excel.  To download the file you can click here and you can download the spread sheet.

The tool itself

Once inside the spreadsheet you will see a few things.  Bear with me though I am going to give you a bit a detailed version of this tool but if you have already dealt with this before you can skip this part.

  • First, you will see a balance date.  Enter in the most recent date of the balances you have.  This way they can calculate how long it will take you to get out of debt.
  • Second, enter in the creditor information, balance, interest rate, minimum payment you are making, and then you can customize it to pay it off the way you prefer.  1 being first to be paid.
  • At the bottom of that chart you will see the total balance and the total payments you art making.
  • Below that you will see the total monthly payment.  This is the payment that will have the extra payment along with the minimum payments.
  • Then there is the Initial snowball payment.  This is the amount you would like to throw towards the minimum payment.  I recommend that you do at least $50.
  • Next, choose your strategy.  There are six to choose from.


  1. Snowball ( Lowest Balance First) This is my personal preferred way to setup the plan because by paying the lowest balance first you will see the quickest results.
  2. Highest Interest Rate. Depending on if you have a lot of credit cards with high interest rates or loans with higher rates this may be a better option.
  3. No Snowball. In this option it will show you what would happen if you didn’t apply any extra payment towards your debt.  I like to use this option as way to compare myself against the actual snowball plan.  This way I can see how much sooner I will be debt free.  However I will suggest this do not use this as a way to do you debt plan.  Use this option only to review your differences between options.
  4. Order Entered In Table. This is just how you entered them into the spreadsheet.  You may have one debt you would prefer to pay off before another.
  5. Custom High and Low. This allows you to pay off the debt with either the highest balance or the lowest balance.
  • Lastly you will see a chart that will tell you what the result will be if you would pay off this debt with the strategy and methods you have chosen.  It will even show you the month and year you will have this debt paid off.



Payment Schedule

This is my favorite part.  If you click on the tab in the lower left hand corner that says “payment schedule”  you will see a list of all the creditors that you have there payment and even the total interest you will pay to them once you have paid off those debts.

You can also customize the way you would prefer to pay off your debt on this page as well.

On the bottom half of this page you will see your entire payment schedule if you would decide to pay off your debt with the strategy you prefer.

If you have used this tool let me know what think about it?  Has it helped you?  Any ways to improve it?  Leave a comment and let me know.

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The REAL Reason You Can’t Get Out Of Debt

October 8, 2008 By 1 Comment

The Real Reason

If you have been in debt for some time you will understand what I am about to discuss.  If you have been trying to build up your emergency fund you will understand what I am talking about. If you are trying to achieve financial independence then you will understand what I am about to relay to you.

In this article I am going to hopefully point out some reasons why you may not be out of debt or achieved much of anything else.  Giving you the REAL reason you can’t get out of debt.  My outcome in this post is to show you that it’s not any one thing that is stopping you for getting debt free…

It’s YOU!

Let me explain.

In life there is a certain area where you feel comfortable at.  For example there are certain financial debts you are comfortable with say your mortgage, car loan, and credit cards.  Certain amounts of income you are comfortable with and use to, and in general certain ways you just like to do things. 

That certainty is what may be holding you back from going on to the next level in your life.  Wether it’s your debt or anything else you are trying to achieve.

Your Comfort Zone 

Your comfort zone is the area where you feel certain the most.  When you step out of your comfort zone you start to feel uncomfortable.  Maybe your late on a payment or taking on a new debt say buying a new car.

You know what I’m talking about.  You’ve had those butterflies in your stomach.  If you have a story about stepping out of your comfort zone I would love to hear it in the comments.

When I started my first business I had those butterflys in my stomach as well, but there is one very important quote that I will never forget.

You must step out of you comfort zone in order to achieve success.

Think about that once.  Anything you have ever want to achieve that took some sort of effort such as getting debt free or being a financial success you had to get uncomfortable in order get there. 

For example when I start this blog I had to step out of my comfort zone.  A million thoughts raced through my head such as what will people think, how will this work, or can I actually do this.  I’m sure you’ve been there.

Why you aren’t moving to the next level?

Think about it this way.  If you were a thermometer and you were always comfortable at say 80 degrees and this is where you see yourself the most comfortable.  Then all of a sudden something happens and life has given you 50 degrees.  Your boss is getting on you at work, your debt is piling up, you missed a payment on your mortgage.  Things seem uncomfortable.  Then several weeks pass and things seem to get better.

Have you ever wondered why this happens?

It’s because your identity is to stay consistent with the way you see yourself.  If you are at 50 degrees and you’re comfortable at 80 degrees a subconscious alarm goes off in your head telling you that you need to correct this.

However the same it true the other way.  If life has given you 95 degrees and  you got a promotion at work, you paid off your credit cards, your emergency fund is fully funded you will subconsciously bring yourself back down to 80 degrees.  You’ll let things slip and fall apart.  You won’t even know you are doing it to yourself. 

Ever done this before.  I know I have on many of occasion’s.  If you got a good story to share here leave a comment.

How can you stop this cycle?

Stopping this cycle is not going to be easy to do but you can do it. 

  • Don’t ignore the situation.  Telling yourself that you don’t do that will only take you longer to climb out of that hole you may be in.  Recognize your situation and look for a solution.
  • Get a mentor.  This is my best advice to you.  They can help you from seeing 80 degrees all the time to helping you crank up the heat a bit and putting you at 105 degrees. 
  • Educate yourself.   Education is the reason why we have more consumers in debt than ever.  Start reading some books, listen to some inspirational speakers, sign up to the Stumble Forward RSS.  The education is worth it.

Are you facing some of these situations?  Feel free to tell us your story and leave a comment.

Filed Under: Debt Managment Tagged With: , , , , ,

Get Out Of Debt Fast Today

September 29, 2008 By Leave a Comment

Is It a State Of Mind Or Just Action?

Getting out of debt is as much a state of mind as it is the ability to simply take action. You have to be committed to taking action if you want to get out of debt fast and you must immediately decide that now is the time to do, both of which are equally important. Getting out of debt is not that difficult, however it is still challenging.

But what isn’t?

You are not the only person who has been in debt; there have been people before you and there will be people after you. Getting out of debt is definitely the first step towards actively investing in your future. Especially when it’s credit card debt that you need to clear up.

Getting out of debt is mostly all about two things:

1) Making the largest payment you can afford.

2) Making sure your debt is at the lowest interest rate.

Make sure you learn the advantages of having a low interest rate and of making a larger payment than the minimum. Getting out of debt is inherently a long process and every little bit of it can help to pay off credit cards, but it’s really about developing better habits. Creating new habits requires sticking to new practices until they come naturally and automatically, so setting small goals can help greatly. Getting out of debt is a process.

Getting out of debt is going to require both discipline and action. It really won’t be easy to do especially if you are already heavily burdened by it. Following a method of listing all your expenses can be helpful because you can track down where your money is actually going. Getting out of debt should be done by following a simple, step by step process. It will take hard work, discipline and persistence, but it can be done and the rewards are truly great.

Check out this article on how to set up your own personal debt plan.

Getting out of debt is also about making sure you have more income than the amount of your expenses, which is basically having more coming in than going out. Remember, it is going to be a long term project. It requires a willing heart, a concrete plan, and a disciplined approach to prevent the need to file bankruptcy.

Paying off your debt is 70 percent psychological and only 30 percent financial. You are going to have to adopt some goals of paying off from the bottom up, so that there’s not only a light at the end of the tunnel, but also marker lights reminding you that you’re on the way out.

Hang in there you can do it.

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The Pros And Cons Of Getting Debt Free Yourself – Part 1

September 15, 2008 By 8 Comments


Can you do it yourself?

Out of all the different ways we have been talking about over the last few days, getting debt free yourself will probably be the first option most people try.  Simply for a few reasons.

  • It cost you nothing to do it yourself.  Other than just paying the debt off.
  • You don’t have to qualify for the program.  It’s your program.
  • Finally, you can do it how you want to.  You have complete freedom of how you want to get debt free.

How do I get debt free?

This is the biggest question people consider when they want to get debt free.  Some will just pay minimum balances on all there accounts or apply a little extra to every account thinking it will save me more than if I just made the minimum payment.  Along with that doing some tough budgeting to apply more money to your debts.  But does this work?

However this may seem like a great way to go about getting debt free but there is a difference in getting debt free just by doing some strict budgeting or actually putting a plan together.  This plan is in known as the debt snowball plan.  You may have heard of people like Suzie Orman or Dave Ramsey talk about this.

How does the debt snowball plan work?

The plan is actually very simple.  Although once you impliment it you must stick to it.

1.  Agree that you won’t stack up more credit.  If you keep adding to your credit cards or any other debt then getting debt free will not actually work.  You must stop using your credit.  You must also stop creating new credit as well.  No new credit cards.

2.  Gather all of your current debts.  Get all of your credit card bills, HELOC (Home Equity Line Of Creidit),  car loans, personal loans, school loans, and mortgage bills together.  Include all debts not just the ones with higher balances. 

3.  Line your debts from lowest to highest balance.  This order is how you will pay off your debts.  Some will say pay off the highest interst cards firsts.  I disagree.  Order them from lowest to highest ballance this way you will see progress right away in the plan.  Also put your mortgage last to pay off.  The reason being there are some great tax benifets to your mortgage as apposed to your credit cards.  Also credit cards will usually have higher interest rates.

4.  Pay the minimum payments.  Pay all the minimum payments on all of the debts except for the one with lowest balance.  The debt with lowest balance you will pay the minimum payment along with an extra $50 to $200.  Whatever you pay extra keep it the same.  Don’t add or subtract any of the extra that you pay.  So if you apply $100 extra always keep it at $100.

5. Continue to pay this until you have the first debt payed off.  For example if your first credit card balance is $1000 and the minimum payment is $50 then pay the minimum plus an extra $100 or whatever you choose to pay extra.

6.  Celebrate!  This is a very important step that most skip.  Celebrate that you have paid off a debt especially your first one.  You don’t have to do anything big.  Maybe you go out to eat at a nice resturant, take the kids to the zoo, or go see a movie.  Have some fun with this.  Getting debt free doesn’t have to be a drag.  It can be fun too.

7.  Start paying off the next debt.  Start paying off the next debt with the next lowest balance except this time add the $100 that you are paying extra plus the $50 you paid on the previous debt along with the minimum balance you are paying on the current debt.   Do this until the debt is paid off.

8. Celebrate again!  Obviously you know why this is important from reading step 6. 

9.  Pay off the next debt.  Again start paying off the debt with the lowest balance and add the $100 extra payment along with the minimum balances you paid on the previous two debts. 

10.  Celebrate again!  Again you know the drill. From here just keep on repeating steps 9 and 10.  Once one is paid off continue on to the next debt with lowest balance applying all the minimum payments plus the extra $100.

You can see how this will eventually begin to escalate to the point where the only debt that is left is your mortgage.  Then with all of those minimum payments you were applying to your credit cards along with that extra $100 you will have that mortgage paid off in now time at all.

I’m debt free, now what?

Once you are debt free start saving the money for an emergency fund.  Save six months worth of expenses in some sort of savings account for emergencies only.  This way if sudden expenses do come up they won’t dig you deeper into debt.

After you have an emergency fund established save the rest back for retirement and possible college savings for your kids.

Last but not least take action.  This is the only way you will solve the problem.  If you wait you to long you may have no other choice but to consider debt negotiation, consumer credit counseling, or worse bankruptcy.  Do let that happen to you.

Start Now!

Finally, are you using this method to get debt free?  Are you interested in doing this program?  What are your concerns?

Read part 2 of getting debt yourself to learn the pros and cons of this program.

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5 Ways To Get Debt Free

September 8, 2008 By 2 Comments

Of all the ways to get debt free I have decide to spend a week discussing the different way to do so.  Also I will be discussing the pros and cons of each option.  A lot of the problem of getting out of debt is knowing really what options are available to you and which will help you the best for your situation.

1. Bankruptcy.  Is this the best route?  Sometimes it may be others it may not. 

2. Debt Consolidation.  This is a technique where you combine you current debts into one and make just one payment usually to get a lower interest rate.  A lot of people will usually combine everything into there home loan.

3. Consumer Credit Counseling.  This option allows you to work with an individual to get debt free.  I think of it like a debt coach. 

4.  Debt Negotiation.  This option is where you higher a company to go out negotiate your debts for you helping you cut your interest rates.

5. Do it yourself.  This option is the least costly of them all and allows you to employ tactics such as snowballing.  However just because it’s the cheapest doesn’t mean it’s the easiest.

Out of all 5 of these options they all have there up sides and down sides.  This will be the discussion as the week unfolds.  However knowing your options is just part of the process doing them is a whole other. 

If you are considering any of these options you may want to read these articles before you decide.  In the end you may decided it may be simpler to go with another option first.

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August 2008: A Month In Review.

September 5, 2008 By Leave a Comment

August is over and things are just starting to heat up.  So I thought I would do a quick review of some of the more stellar articles that came up.

This month I focused more on mentality because you can have all the plans and great ideas of ways to get out of debt, saving more money, and becoming financially independent but if you don’t have the mentality to stay focused long enough to get there it don’t mean a thing.  With a strong centered mentality you can do anything.

The 2 biggest ingredients to success.  Have you ever felt success just wasn’t in the cards for you?  If yes then this article is definitely for you.  Success can happen for anyone but most simply don’t know why.

How to keep a debt free mindset.  Mentality is the name of the game.  More importantly learning to keep that mindset so you can bare through the tough times.  This is always the toughest part about getting debt free.  I also want to point out that this hold true for everyone.

Including me!

Keeping a positive and negative free mindset will test you.

3 simple tips to save money around your house.  With the current conditions of the economy I felt I would share a few ideas on how I save a few bucks.  Although these are a few things I do you may know of others.  Saving money hasn’t just become an idea any more it has become a lifestyle.  Even the higher income people are looking for a few ways to save a few bucks. 

Anyone interested in sharing a few more ideas check out this article.

These are just a few articles from last month.  If there is something that you would like to hear more about that deals with getting out of debt, building financial security, and achieving financial freedom please feel free let me know.

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