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How To Eliminate Your Load Of Debt

By Josephine Pennington


If you are struggling along under a load of obligations, help is available. You will no longer have to worry how to make your income cover your expenses each month. Getting out of debt is not an overnight process. You didn't create debts overnight, but paying off your debts is possible, with dedication. You will find the help you need to become debt free for life by reading and applying the suggestions and principles stated below.

To begin the process of eliminating debts, you must have a firm knowledge of your precise economic condition. Keeping records of each penny earned and spent over the next month will give you a starting point. If you spend even a few coins for a vending machine soft drink, or a quarter in a parking meter, write it down. You may be surprised to learn where your money is being spent.

From the information in the records for the month, build your personal or household budget. Allow for your non-negotiable payments first and the amount that is left is what goes for paying down your outstanding obligations. The first of the non-negotiable items is yourself. If you are unable to discipline yourself to place money in savings, have it withdrawn from your paycheck and electronically deposited into your savings account.

Build an emergency fund. When you have an emergency fund of $500 or $1000, you won't worry about that trip to the dentist, or the new tire that is required. You can use funds strictly for this type of emergency, rather than trying to increase a credit card balance.

Using the budget you created earlier, concentrate on paying off the obligation with the smallest monthly payment amount. When that is cleared, put all your efforts into paying off the next largest amount. Repeat this process with the next largest obligation until all of your debts have been erased. Many people can accomplish this goal within two to three years.

Choosing an accountability partner is another way to control expenses. Decide on an amount that is the limit for unapproved purchases. For example, you may decide that any single item purchase larger than $100 requires justifying the need for the item to your partner. Each month, go over the budget and spending comparison to make sure you are continuing with your spending limits.

Finding ways to reduce your expenses is challenging, but it can also be rewarding. The items which can be eliminated from an average household budget can be significant. Those savings can be applied to the debt reduction plan. Another way to speed the process of becoming debt-free is to increase your income. A part-time job or a home-based business may be an option. You could also have a yard sale or sell unwanted items through a advertisement.

Learning to live within your means is not an easy process. You will gradually learn the value of not spending money you don't have. The stress reduction that goes along with debt free living is good for your health.




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