How to Start Living a Debt Free Life

A Debt Free lifestyle is easier to attain than you think. It doesn’t matter how much money you make or how in debt you are. Once you learn how the only bills you’ll pay are utilities. No mortage, no car payments.

Steps

1. Stop adding to your debt. Cut up the credit cards and throw away the checks so you can’t bounce one. Do not sign up for any more credit cards or loan offers. Stay away from Pay Day Loans. Remember - If you can’t afford it today, you can’t afford it tomorrow (meaning don’t expect to pay tomorrow for debts incurred today at the gaming store).
2. Admit you are in debt and start living like it. Did you know that most millionaires live in modest homes and drive used cars? That’s why they are rich. Don’t expect to eat out at fine restaurants. You can’t afford it, get over it. You will be able to go someday soon but not now. Don’t buy new clothes for a while. There is nothing wrong with what you already own. Saving that money for a few months will help get you back on your feet.
3. Total up your debt. Go ahead and face the music. You need to open all those unopened bills. Make a list of all your debt, big and small.
4. Pay with cash only. While debit cards are OK to use once you get in control they can still allow you to spend more than you should but at least it’s not like a credit card.
5. Talk to your creditors. Don’t ignore them, they won’t ignore you. If you keep in contact with them, they will be more willing to work out a plan with you. If the first person you speak with is unwilling, then ask to speak to their supervisor and just keep going until they are willing to work with you. Be honest and pleasant, no one wants to help you if your nasty.
6. Make a plan for which debts to pay first. You need to pay everyone something every month even it’s it’s only a dollar, but you need to have one debt that you are going to get rid of first. Target the one(s) with the highest interest rate, which is called “Laddering”. Which reminds me … Call them and ask them to reduce your interest rate - many times they will do this, just because you asked! Alternately, you can use a “Reverse Laddering” approach, where you pay your bill with the lowest balance first, then the next lowest balance, and so on. This frees up more cash in hand to start chipping down the higher balance debts you have. This method is effective because instead of paying small chunks of money toward those high interest bills, you can throw large chunks of money at them, reducing the amount of time needed to pay them off. Also, your attitude will be better because you see the results of your progress faster, and therefore aren’t discouraged as easily. You must be careful though, because sometimes the money you pay on the higher interest is more than the money you free up each month when paying off the small balances. Review your finances thoroughly, crunch the numbers, and see which method would be the most effective for your situation.
7. Roll over the savings. Once you have one debt paid, apply that money to the next debt you are trying to pay off and just keep going. This is an integral part of the “Reverse Laddering” method mentioned above.
8. Get frugal. So you don’t like cutting coupons? Too bad. If you could save $10 on your shopping next trip why wouldn’t you? Buy a cheaper brand of toothpaste. Use half the toothpaste you currently do - the size of a pea is all you need. And think about it, that $4.00 tube is now really only $2.00 … because you are making it go twice as far! it’s the little things … lots of little things add up. And even though it may be kind of “nerdy,” it is actually fun to think of all the little ways you can save money. Food shopping, buy whats on sale and learn to live with it. You’ll save and not starve. Go to matinées instead of the nighttime movies. Make your own lattes instead of Starbucks. Think to yourself what it is you really like … and then think of a way you can do it cheaper! Homemade chili is so much tastier than canned. And you can add all the things you love … Beer? Cilantro? Jalapeños? Cheddar cheese? Just the way you like it! Drink allot of bottled water? Refill them at home. The savings will rake up. Take your lunch to work, eating at the fast foods and deli’s cost a lot of money.
9. Be conservative with your utilities. Lower your thermostat in the winter. Spend the evening at the library instead of heating up your place. And read their magazines and drop your subscriptions. Fix leaking faucets, turn off unused lights, etc.
10. Change your way of thinking. Instead of saying that something only cost a dollar think of it as keeping that dollar instead. That dollar will grow interest for you. So that item doesn’t really just cost a dollar it costs you your future!
11. Learn how to invest … not just save … but invest. Think of every dollar your money is not earning as future money just dribbling out of your pocket. Look up an investment class at your local university. Or check Craig’s List. You will find something if you really want to. (Talk to a teacher or a librarian if nothing else is working.) Then make your money work for you! Yes it takes time. But you can either have $100,000 (and easily more!) when you are 40, or not! Just check out those compound interest tables. You cannot believe how easy it is if you just get started now. If you are young, you have time on your side … and time is one of the major factors with compound interest. If you have a 401K at work, put in 1% if you can, just to start it. You really wont miss the money, but you know in the back of your mind that you have something good going for yourself.
12. Save for a rainy day. Old cliche I know, but it’s true. Try to put away 10% of what you make into savings. If you can’t do that then put away whatever you can. Even if it’s .50 cents. Make this your first bill that you pay. Because you are the most important thing you need to take care of. Then learn how to make your money work for you (tip: The stock market is the fastest and surest way to make the most money - over 10% over the long haul - no kidding - look it up!
13. Combine your errands together. Don’t go out for just one errand, do them all at once, Get gas, stop at the post office, drug store and grocery shopping. Try to combine some of those before and after driving to work. You’ll save more each month than you think.
14. Get rid of the stress. Being in debt is not normal or healthy. Take some time out for you to just relax. You will be better able to handle the debt when you are rested. Check out a library book or two - something light or humorous. Make popcorn (cheap) and have a wonderful, carefree evening.
15. Don’t ever think that your alone in this. So many people are trying to get back on their feet. Yes it’s hard to give up a lot of the things that in the past have made you happy. Doing all the things above, as hard as it is, will help you in the long run.

Tips

• Think before you buy anything. Do you really need it? If not put it back.
• Be strict with yourself.
• Be strict with children, the I Want’s have to go away even if it means crying through the whole store (I’ve done it)
• If you think you “need” something, wait one month (or six months, or whatever works for you) before you buy. If you still believe you need it, then get it.