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Credit Card Debt: How To Deal With It
Do you have a hard time paying your credit card bills? Starting
to get notices from waiting creditors to pay? Worried that you
might lose your properties like your house because of credit
debt? Chin up: Dealing with credit card debt is not as...
Debt Elimination 2
The First Step To Debt Elimination Regardless of your personal and financial circumstances, your education and your background, the chances are the first step you need to take in debt elimination has to take place in your mind. The Western mindset,...
Filing Bankruptcy And 3 Helpful Alternatives To Eliminate Your Debt
You've got some serious debt problems. Take heart in the fact
that a lot of people do these days. The key to getting out from
under debt is to evaluate the situation you're in, and then to
decide if you're willing to do what it takes to change...
Guide to debt consolidation: simple steps to consolidate debt
A Debt consolidation loan is a loan used to repay several other
loans. It is a single, low cost, secured loan. A UK Debt
Consolidation Loan is a low cost loan secured on your UK home.
It frees up the spare capital (or equity) in your home to...
Overwhelming Debt? Bankruptcy May Be Your Way Out, But Maybe Not
Things are bad, really bad. They have to be for you to be considering bankruptcy. It's true that bankruptcy can wipe away your debts, or most of them anyway. Taxes are exempt from bankruptcy protection. You can declare bankruptcy, but if a...
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Debt Elimination 3
Planning To Achieve Debt Elimination
Once you have started the process of changing your debt mindset to be against taking on consumer debt, then that is something you need to continue until it becomes the norm in your life. In some ways it is like stopping smoking; trying on will power alone is not enough, you need to get to the source of your problem and permanently change it. That is why self hypnosis can be successful with stopping smoking; it reaches the subconscious mind and re-educates it. With debt elimination, it is the same; to succeed permanently you need to have changed the way your mind works, not just consciously, but sub consciously too.
In parallel to changing your mindset, you need to plan your debt elimination strategy. This will depend on you precise financial situation: your level of debt, monthly income, monthly commitments, overdue debts and so on. So, I cannot make specific suggestions for your circumstances, just give a few pointers to what you can do to head down the road to debt elimination. You may well get some benefit from debt counseling or financial planning advice at this stage, but that depends on you.
Your chances of achieving debt elimination within, say, 5 years, will depend a great deal on your own efforts, so if you can get through this part alone, then that may strengthen your chances of success.
Budgeting For Debt Elimination
You need to take a long hard look at your present financial situation and how it is likely to evolve into the future. For debt elimination to succeed, you need to be in control of your finances and keep your finger on the pulse all the time.
The starting point should be a list of your monthly outgoings. If you are unsure of any item, then monitor it for a month to see. For example, you may not know exactly how much you spend on food and other items from the grocery stores each month. Just keep a record of them for a month to see what your monthly expenditure is, but in the meantime use your best estimate.
You can then compare your monthly outgoings with your net income, and this will be the basis of your budget as you develop a plan for debt elimination. You also need to compile a list of your debts; how much is outstanding, what the monthly payments are, and what the interest rate is.
As an example, let us say you have a net
monthly income of $2500, and your total outgoings, including debt and credit card repayments, are $2300. This means you have $200 to spare. With your new, anti debt mindset, you want to use that $200 spare to get your most expensive debts cleared first. There is a good chance it is the credit cards that are most expensive, so you can target the most expensive credit card ie the one with the highest interest. You owe $600 on that card, so in 3 months you can clear it. When cleared, you can move on to the next most expensive.
Depending on your debt level this could be a long process; that's why you need to plan it out and see how you will cut down that outstanding debt level over the coming months and years. So long as the total debt level is reducing, you are heading in the right direction.
Also, take a close look at those monthly outgoings. Are you sure there's nothing that can be cut out or reduced? Of course there is, unless you've already gone through that process recently. Be ruthless with this new mindset of yours; it really is worthwhile, knowing there will come a day when you don't have to worry about the odd few dollars here and there. Highlight those budget items that are unavoidable, and make sure you pay those first every month, or at least have the money earmarked.
If you rank your debts in order of interest rate cost, and go for the highest first, you can work through them one by one. Need a morale boost to get you off to a good start? Then choose the loan with the least outstanding, and clear that first. It may not be the best financially, but if it gives you that quick satisfaction, so the sacrifice may be worth it.
Debt elimination is not going to be an overnight happening. You need to be prepared to plan for a few years. 5 years is always a good period to plan for in business, and can be too in your personal life and finances. You may be amazed at the transformations you can achieve in 5 years. But above all, you need to maintain that anti debt mindset. After all, that is what will bring you to the debt elimination pinnacle.
In the next article, we consider what to do if there is really no spare in your monthly budget.
About the Author
Roy Thomsitt is the owner and part author of http://www.eliminate-credit-card-debt-now.com
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