How To Get Out Of Debt - Don't Be A Slave To Credit Card Companies“The price of discipline now is less than the price of regret later.” A growing number of Americans are not disciplined about money, and are slaves month after month to credit card debt. They are chained to the high cost of poor financial decisions and ensuing regret. Increasing portions of income are swallowed up by minimum payments and accruing interest. Rather than living in financial chains, commit to understanding and applying the true freedom of financial discipline - get out of debt - some solid steps are outlined below:
Put Your Finances under a Microscope- and Your Fear in the GarbageFinancial freedom and fear do not go hand in hand, and sticking your head in the sand when it comes to money needs to end. While many people are fearless and elegant when it comes to other areas of life, they shrink back around finance. If this sounds like you, regain control one step at a time.
First, have a moment of truth. Realize that thoughts determine emotions, which often override rational thought and impact your actions- especially when fear, anxiety, or stress is involved. Stand up against this. Take a few days to be aware of the actual thoughts you think when it comes to money. Jot them down and see them for what they are.
Also, be aware of the emotions that these thoughts influence. Are you afraid, anxious, stressed, restless or hopeless? If so, why? Did your family have many financial stressors growing up? In reality there are many reasons why you may view money negatively. If you can’t pin point them, talk with somebody who can help you organize your thoughts. Once you do so, see negative thoughts for what they are; they are simply smoke and mirrors that are only hindering your progress to financial freedom. In light of what these thoughts truly are, dismiss them and replace them with healthy thoughts and habits.
Financial sustainability is the key to financial stability. Even if it’s uncomfortable, start with this healthy habit- evaluate your expenses and create a budget. While you’re at it, think about long-term goals that will motivate you to stick to a budget. These might include getting out of credit card debt, saving for a vacation, education, the ability to support a cause close to your heart, etc. Here are some general steps to get out of debt:
Budget is NOT a Four Letter Word!If the word budget scares you, think of it as ‘asset allocation.’ Learning to live off of what you earn creates financial sustainability, which will help you get out of debt.
- Know how much income you bring in. Also estimate your expenses: rent, food, transportation, insurance, bills, weekly cash (see below), etc. If your essential expenses are larger than your income, you are not financially sustainable because it takes more than the resources you have to stay afloat.
- If you are over extended, determine which expenses you can cut from your life- lunches out, lattes, etc.
- Always save a specific amount from your income and stick to it.
- Allocate a set amount to repayment, and make sure it is more than the minimum payment listed on your statement. Take into consideration the amount of debt you have, the amount of time you have to pay it off, and interest rates. If you cannot afford even the minimum payment, you have more than $10,000, or you are experiencing a hardship, consider debt settlement
- Use an online debt calculator to see how much you will pay over a given period of time. You can set the monthly amount as your minimum payment, or plug in other amounts to gauge the total amount you will spend by the time the balance is paid off.
- Rather than putting major purchases or fun items on a credit card, determine how much you can save for them each week, and build anticipation for that purchase. Instant gratification will not help you get out of debt.
Put the Credit Cards where you put the fear- in the TrashRather than using credit cards, use cash. Using cash is a tangible way to recognize how much you’re spending, and encourages you to be more responsible.
- Get rid of all credit cards except for one designated for emergencies. Use it ONLY for true emergencies or disasters.
- Take out a set amount of cash for the week. Once you spend this amount you are allowed no more for the week. Remember, you are eliminating unhealthy thoughts toward money and replacing them with beneficial ones.
- Do have fun- but don’t blow your entire cash budget to do so. Allocate a portion of your weekly cash to something you enjoy. We recommend you include savings and essential costs in your overall budget (more info. above)
- Think about your purchases. What is your motivation for buying? Is it a need or a want? Is the happiness/rush of the purchase soon replaced by feelings of stress, anxiety, or need? If so, this purchase is tied to unhealthy money thoughts and habits.
- Don’t buy things you CAN’T AFFORD!
Consider Debt Consolidation
- Consider transferring balances with high interest rates to one card with a lower rate.
- Research opening an account with a 0% APR introductory period. Be aware that some rates will jump after the introductory period ends, so watch out for this.
- READ the fine print. Be aware of yearly fees, late fees, and interest rate changes when a payment is missed.
- If you do transfer balances, don’t close the accounts. This can hurt your credit score.
Freedom is nearYou CAN get out of debt. Freedom is near if you put into practice the following:
- Gain understanding of unhealthy money thoughts and habits- understand WHY you buy WHAT you buy
- Dismiss those thoughts and habits and replace them with healthy ones by…
- Creating a workable budget, or ‘monthly allocation of assets”
- Cultivating good spending and saving habits
- Using cash rather than credit cards and save for big purchases rather than buying immediately with credit
- Considering consolidation of higher interest cards to one card with a lower interest rate
Taking Financial Control Is The First Step To Getting Debt-FreeIf you feel like your financial pressures are spinning out of control beyond what you can handle, do not be afraid to seek help. Seek the advice of a professional counselor. Call Superior, we are here to help you. Our counselors are IAPDA certified and will guide you to an option that is right for you. You deserve to break the chains of financial bondage to live in freedom.
Superior Debt Relief is a Debt Relief agency. Our Debt Settlement Company works on your behalf to secure debt-free living with a number of services, including: Credit Card Debt Relief, Debt Consolidation Program, Debt Negotiation, Debt Management Benefits and Consumer Credit Counseling Service.