Hello everyone! As you know I am still on vacation, but wanted to still give you something to chew on for the week. Kris who writes for debt-tips.com, submitted this guest post, and although he and I disagree on debt consolidation, we both agree that becoming and staying debt free is a good thing. I also try not to flush people out just because I disagree with them on a few issues, as I feel that there is most of the time something of value to be heard. For the most part, I think Kris has given some good advice. Enjoy!
5 Simple Ways To Pay Down Your Credit Card Bills Faster – Entirely On Your Own
It can happen to the best of us. An unexpected car bill. Medical bills that aren’t covered by insurance. Loss of a job. Even the temptation to use credit cards for something we really want (and convince ourselves that we can afford it – even when we can’t) is an easy trap to fall into.
And before you know it, you’re drowning in credit card bills! That’s the easy part. The hard part is paying off the bills once they get too big to handle. That’s how the banks make their money. And why so many of us get in way over our heads.
The good news is that there are ways to get this debt back under control – without filing bankruptcy or signing up for a debt management program. Here are 5 simple ways to pay down your credit card bills faster – entirely on your own!
1 – Pay an extra 10% each month.
Of course, paying anything more than the minimum is hard when money is tight. But you must do it. Even if it is only an extra $10 or $20 a month. Over time, this will save you a bunch of money, and get you out of debt much faster.
2 – Call for a lower interest rate.
These days this strategy is harder to accomplish. But it can still be done. Simply call up everyone you owe money to and ask for a lower interest rate. If they say “no” wait a month and try again. Or ask to speak with a supervisor. Even a few percentage points can make a big difference.
3 – Put away ALL of your credit cards – except one for emergencies.
No matter how hard it gets, if you continue using your credit cards you will never be able to pay them off. So put them in a drawer, a safe deposit box, a sealed envelope, whatever it takes. And keep one handy ONLY to use in case of emergency!
4 – Pay your credit card bills first.
Obviously, nobody wants to make paying off credit card bills a priority. We’d rather buy big screen TV’s, hi-tech cell phones, and go on fancy vacations. But you must do it anyway. And if you make it a habit to pay your credit card bills first, you’ll be less tempted to buy all those other things – that you really can’t afford anyway!
5 – Keep a written record of every expense.
Nothing will help you understand why you are stuck with all this debt faster than looking at a list of every payment you make. You’ll see all those expenses that you can live without. And you’ll then have more money to pay off your bills.
No, getting out of debt is not fun and games. It takes work. And sacrifice. And determination. But it can be done.
So set a goal for yourself to get out of debt, and STAY out of debt, and you’ll be amazed how good you will feel!
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For more tips on getting out of debt and turning around your financial situation, visit www.debt-tips.com. You’ll learn the actual way I used to get completely out of debt and fix all my money problems.
Are you finding yourself feeling frustrated or overwhelmed with paying down a large debt? As I have recently become debt free myself, I understand completely. Our last debt was approximately $9,000, and it took us what seemed like forever to eliminate it. During that time, we often felt we were making little progress, mainly because the “quick wins” motivational boost we had been receiving from paying off our earlier debts was no more.
I can’t stress to you enough how important those “quick wins” were to us. I think I might have a solution to this problem that might give you that extra motivation. To be honest, I wish I would have thought about this when we were still paying our debt down. So we know that the motivation we receive from paying off each debt is enormous.
What if you broke up your larger debts into smaller, bite-sized pieces? I think the key to making this work though is to actually write it out on a piece of paper. Visualization is the key. Let’s say you owe $10,000 on your plastic companion.
If I were doing this I probably would not write out the total debt of $10,000. I would instead break this debt into $1,000 dollar bites. The reason for not writing down the total is because you want to trick your mind into believing that these are separate. Furthermore, it would be a good idea to set a realistic time line for each chunk to give you something to strive for. Remember that setting goals, gives you something to reach for, and also gives you a greater likelihood of completion.
$1,000 – DONE (6/2009) <~~~motivational boost!
$1,000 – DONE (8/2009) <~~~motivational boost!
$1,000 – DONE (9/2009) <~~~motivational boost!
$1,000 – (11/2009)
$1,000 – (1/2010)
$1,000 – (2/2010)
…..etc.
I would also recommend that you only worry about doing this for one large debt at a time. You don’t want to overwhelm yourself with a 6 page list of debt. You want this process to remain as positive as possible. Put this list on the fridge and be sure to check each nasty chunk off as you pay it off. This is important!
I hope this helps you stay motivated during your important mission of debt removal. Get that debt OUT OF YOUR LIFE, once and for all. You can do it and when you do—you will feel amazing!
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The Debt Snowball – Do It Your Way!
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I receive a lot of emails asking me “where do I begin?”, so I decided to write this blog about just that. One of the most overwhelming feelings for most is in the beginning, when things are not very clear, and you do not know where in the world to start!
You are not alone, and like MANY others, I have been there too! There is a reason why it is overwhelming, so I want to discuss some prerequisites before we get started with the 3 Steps To Debt Freedom.
- Prerequisite #1 – You must STOP BORROWING MONEY! I say this a lot because believe me, this is a BIG problem for most people. Until you stop adding to your debt tab, you can never really start moving forward, at least not enough to make significant progress, to keep enough motivation to continue. When you feel like you aren’t going anywhere it is really easy to give up, which in the long run causes your situation to get even worse. I know you don’t really want that so STOP BORROWING RIGHT NOW!
- Prerequisite #2 – You must actually DO A BUDGET! To most people this word is very scary, because they think it is a system to keep them from having fun. To the contrary, it is a system that ALLOWS you to tell your money exactly what to do, no matter what that something is! The budget is so important because it literally allows you to see with vivid detail, what is actually going on. It is like looking at your possibilities through a microscope! When you see clearly, you make better, more informed decisions! GO DO A BUDGET!
- Prerequisite # 3 – You must address the behavior that got you where you are today! You are where you are today because of the decisions you made yesterday. It’s real easy to blame someone else for your problems, I have done it too! Many times, and for many years! The day I discovered personal accountability, I truly became a new man! In fact, a book I HIGHLY recommend is called QBQ – The question Behind The Question. We often play the blame game which really gets us nowhere because we never address the problem by doing so. Instead of asking, WHY did this happen to me, ask yourself, HOW can I resolve the issue on my own?
If you stop borrowing, do a budget, and address your behavior with money, I promise you that you WILL be able to accomplish the three steps below! It will sound impossibly hard at first, but when you do the above, you will find the money to do what’s below!!
The 3 Steps To Debt Freedom!
When WE started using these steps in hopes of changing our financial position, it excited us! For the first time ever, we felt in control, and our situation has increasingly improved ever since. Do not take these steps as an absolute problem free path to debt freedom, but instead look at it as a guide to help you better your position so that one day when life happens, you will be ready to absorb the impact with a plan, instead of with a credit card!
After completing the three prerequisites listed above,it is now time for you to pack up, and prepare for the long, but rewarding hike to the top! Many have climbed it, many are still climbing, and so now it is time for you to join us on a journey that leads to Debt Freedom and Financial Stability!!
- Start Saving For Your Baby Emergency Fund – This is a very important step because it allows you to put a cushion between you and life. We all have emergencies, and the key is to be prepared for those emergencies! No, not with a credit card like in the past, but with what some would call an old, long lost tradition called SAVINGS! It may seem prehistoric to you now, but wait until you see how powerful this is. More importantly, wait until you have an actual emergency and see how great it feels to know your covered. No more get it now, pay later, that is old news! SAVE $1,000 as quick as you can, then you can move on to step 2! I know it sounds hard, but you are more than capable! Find out How To Give Yourself A Raise!
- Pay Off Your Debt Using The Debt Snowball Method - This is controversial to the mathematicians out there, at least the part about how to list your debts. Dave Ramsey counters them by saying, “If you were doing good math, you would not be in debt in the first place!” Dave also teaches doing the Debt Snowball as follows. You list your debts from smallest to largest, except your house, on a sheet of paper regardless of the interest rate. (This is the part that math nerds can’t understand, but there is some psychological reasoning involved.) The reason is because you need some quick wins, and when you start with the smallest, each time you pay one off, you are energized and are ready to knock out the next one! The term “snowball” comes from the previous amount owed rolling over to then pay off the next debt on the list. Eventually the debt snowball gets so big that you are able to attack your remaining debt with greater ease! Try it and see for yourself!
- Complete Your Emergency Fund – Now it is time to prepare yourself for a bigger thunderstorm! The $1,000 from step one is mostly to cover the little stuff, and to give you some breathing room to knock out your debt. Dave Ramsey calls #3 the Fully Funded Emergency Fund, and it consists of saving 3/6 months of your expenses. With this amount of savings in place, not only will you be able to handle the small stuff, which happens more frequently, but you are now able to handle the big emergencies as well. (e.g. losing a job, unexpected hospital bills etc.)
Most of my readers already know that I am a huge fan of Dave Ramsey! Dave changed the way we think about our finances, and in turn changed our financial path in the process. We started Dave’s Total Money Makeover in January 2008 with about 25,000 in debt. We now have slightly over $3,000 left to pay!! Debt Freedom is in range for us and we can taste it! Don’t you want a bite?? I’m sharing, and there is enough for everybody!!
Do you have any additional questions? Please address them in the comments section below or you can contact me here! I hope this helps you find the hope you have been looking for! Good Luck!
Recommended Reading:
- The Total Money Makeover – Dave Ramsey
- QBQ: The Question Behind The Question – John G. Miller
7 out of 10 people live paycheck to paycheck without even blinking an eye. After all, it is what everyone else is doing right? Have you ever tried to do a budget? This blog is about telling your money what to do. It is about getting rid of the debt that keeps you from enjoying life. It’s about having a plan!
Do you feel it’s just too late and you have no traction? I am going to show you exactly what it is like to become debt free! I am quickly becoming a part of the winning team, and that happens to be the 30% who have decided that treading water in no fun! With all the effort it takes to swim in place, you may have decided that you were sick and tired of following your plan. You are ready to swim in rough waters in order to escape. Just like swimming in rough waters, getting out of debt is much of the same. It’s tough at first but eventually you get stronger and the rough water starts to feel like a gentle stream.
Once you make it to the gentle stream, it is so rewarding and refreshing. In order to get their you have to change your current financial plan, if you even have one. What you have been doing with your money has got you right where you are today. As Dave Ramsey says you have to face the man in the mirror. You have to decide what is more important; that car which is pulling a hefty payment, or getting out of debt and having a life? I have decided that I want to experience true freedom. Have you tried to budget only to find out that your money runs out way before you want it to? There is a reason for that. It’s called YOU! What if you got rid of your car so you could free up some money? Could you use an extra $300 or so a month? I know it sure helped us!
Look at getting out of debt the same as hitting a Home Run. A Home Run is always more fun that just getting a double. we all know that the further you hit the ball, the closer you are to getting to home plate. Having a car payment is like getting thrown out at first, because you didn’t hit the ball far enough to get anywhere. Getting rid of your car payment, or any other debt payment, is like practicing and getting stronger and stronger so you can hit it further!!
Don’t you want to make it all the way around the bases so you can see how it feels to hit a Home Run? What base have you made it to?
- FIRST BASE - You have decided to never borrow again! You are now on a budget, and you are telling your money where to go instead of wondering where it went. You are becoming gazelle intense and are realizing that you may have to downgrade to the cheaper, more affordable living arrangements. Sell the car(s)! Sell the big screen T.V.! What do you have to sell to get as much traction as you can? Come on, make it to second base!
- SECOND BASE – You are now doing everything you can to build up an Emergency Fund to prepare you for when life happens! You have dropped the massive weight of your car payment, and now have built some protection. Not only are you running faster, but you are starting to build some confidence too. There’s a light at the end of the tunnel…NOW RUN TO IT!
- THIRD BASE – As you round second and head for third you start to taste the possibility of approaching home. It feels great, doesn’t it? You are now paying off your debt from smallest to largest, and are beginning to get some traction. Your confidence builds even more and your thirst for Financial Peace is making you run faster and harder.
- HOME PLATE – Congratulations!! You have hit a Home Run! How does it feel? Now you are debt free except the house and you are ready to add to your collection of Home Run balls. This collection is your payoff from so much hard work and sacrifice. This collection represents your Fully Funded Emergency Fund. (3/6 months of expenses) Did you ever think that this was even possible? Now you know and are probably feeling pretty good about changing your broken plan. WAY TO GO!
- ALL-STAR TEAM – You have hit a GRAND SLAM with the bases loaded in the ninth inning. You are the winning run! You now have money going towards retirement (15%), as well as funding your kids college fund. You are now a baseball sensation which has earned you a spot on the All-Star team. Your mortgage is paid and like Dave Ramsey would say, you are finally ready to build wealth and give like never before. More importantly, after all your hard work, effort and sacrifice you will finally have the comfort of knowing that you can retire with dignity. Totally free of the worries and stress that comes with knowing that you don’t have to pay off all that debt you ran up from all those things that you “needed”!
If you aren’t ready to hit that Home Run then prepare for the consequences of what that means for you and your family. Soon you might have to explain to them why you are broke because you have always borrowed everything you gained! Do you want me to tell them about eating Alpo at retirement or shall I?
GO HIT THAT HOME RUN!
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