Don’t Let Debt Hold You Back

2012 is rapidly coming to a close and it’s time to start thinking about your goals for 2013. If you have debts consider developing a plan to make 2013 the year you get out.

Interest Affects Your Bottom Line

The exercise of defining all of your credit card debt and the subsequent interest rates should be a top “to do”. Start by pulling your free annual credit report and seeing what you owe and at what rate. Create a spreadsheet, document or put a pen to paper listing your debts. Then calculate how much money you are spending each month on interest and fees for those cards.

High interest rate debt is like taking a pay cut. Consider this:

You have $10,000 in credit card debt at an average interest rate of 21%. You will pay $7,608 in interest plus possible finance charges. Yikes! That is a lot of money to throw out the window.

The Vicious Cycle

Maybe you are a casual borrower. Your balances are normally between $5,000 and $7,000 a month, and your minimum payments are around $300.00. You make the monthly minimum payments easily as they fit into your budget, but at this rate you never really pay the balances off.

You get sick, become unemployed or face a divorce and soon those payments are no longer manageable. Now what? You start to fall behind, creditors are calling, accounts go into collections and you are cut off from the vicious cycle and no longer able to secure additional credit.

Not only are you left with debt, but now you face the repercussions of a poor credit rating. A poor credit rating can keep you from owning a home, renting an apartment, affect your insurance rates, and maybe even preclude you from employment opportunities.

Financial Security is Often out of Reach

Those that are debt-free have advantages over those facing monthly debt payments. Paying cash for life’s expense leaves you money saved from interest rates and fees to pay yourself. Savings is the key to do the things you’ve always dreamed of, such as:

  • Traveling
  • Becoming your own boss
  • Building up retirement
  • Staying home with your kids
  • Owning a home

It’s kind of like winning the lottery when you are debt free. You have extra money each month to focus on the things you want instead of treading water each month, or worse falling behind.

If you are in debt, making debt freedom your goal for 2013 is a great place to start. By making a conscious effort to rid yourself of debt either on your own or with the help of a debt relief provider, you will be gaining quality of life, piece of mind, and a new set of financial goals for your new debt free life.

Are you going to make 2013 debt free?

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About Suzanne Cramer

10 Responses to “Don’t Let Debt Hold You Back”

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  1. I could not agree more. We paid off the little bit of remaining student loan as well as our car early this year. Thankfully all we have left is our mortgage and will have that around for awhile. It’s so freeing to not have that burden of useless debt.

  2. Petunia 100 says:

    Thanks to a nice Christmas bonus, I just paid off my only consumer debt. It feels great! (My mortgage is another story.)

    I am frugal in some ways, but am very willing to spend in certain areas. Not having a written budget lead to a credit card balance I could not pay in full. After years of having no credit card debt, that felt lousy. Now my written budget is in place and I intend to plan better to avoid new debt in the future.

    • @Petunia100 That is fantastic news!! I struggle with the same issue when it comes to spending; I am very frugal with grocery shopping, clothes, etc but when it comes to stuff for my son I tend to go waaaay over budget 🙁

  3. It is kinda like winning the lottery but not really yet. I guess that’s a good way to say how fortunate we are and we don’t have any stress although saving for the future is another story. Anything could happen to either one of us at any time and all our good fortune could get flushed down the toilet. I don’t think until we had an amount we felt comfortable with for the rest of our life we would then feel like we won the lottery, For now we feel we won the debt-free game. Good Post. Mr.CBB

    • @Canadian Budget Binder Being debt free is being stress free, for the most part 🙂 Saving is tough especially when you have a tight budget…just remember every little bit counts!

  4. Travis says:

    Well I’m definitely making 2013 a year that brings me closer to that freedom. At the end of 2013, Vonnie and I will have (projected) 3 payments left on our DMP.

    O.M.G. IS THAT RIGHT? Yes, at the end of 2013 we will be 3 payments away from being free from out beneath our mountain of credit card debt.

    It’s gonna be a great year……

  5. @Travis Wow, 3 payments at the end of 2013, that’s AMAZING!!!! Your CareOne family is very proud of your accomplishments to date and will continue to cheer you on all the way to the finish line!!

  6. Jeff Ehrlich says:

    Suzanne, The New Year is always a great time to set new goals for destroying your debt. I am a big Dave Ramsey fan and believe that before you start your “debt destruction” program you get that $1000 Emergency fund in place, get on a “Spend every Penny” budget and then start paying off debt with the lowest balance 1st regardless of the interest rate. When you are attacking the lowest credit card you pay the minimum’s on the rest. Once that is paid you starting putting all that money to the next one. Robin and I were $150,000 in debt just 6 years ago not including our mortgage. As of December 14th, 2012 we are completely debt free including our mortgage. Everyone should have a goal of paying that mortgage off before they retire in my opinion. Get in the 10-10-10-70 club from the get go and you will experience financial freedom. Give 10%, Save 10%, Invest 10% and Spend 70% of your net income. Start early if you can – don’t wait until you are 55 like Robin and I did. Nice job on the post. Jeff

  7. @Jeff That is awesome news!!! Congrats 🙂 Debt freedom is something that everyone should aspire to! Thank you for sharing.

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