"When a noble life has prepared old age, it is not decline that it reveals, but the first days of immortality."Muriel Spark
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When you leave school, you can start building a credit record for yourself. The only way to do this is to go into Debt. You think you can handle it: paying off your credit cards every month, staying up to date with all your other monthly payments. You're earning an income, living the high life and you can handle anything that life throws at you.
Then Disaster Strikes - the car breaks down or someone in the family gets ill, and you rapidly realize that you're getting over your head. When the curve balls come your way, getting into debt can sometimes be the only way to cope.
All to soon, the Money coming in just doesn't cover your monthly expenses; you find yourself going deeper and deeper into debt just to make ends meet. And everybody who was so nice about giving you the credit in the first place, suddenly turns nasty and starts making demands.
Nobody likes to find themselves in this situation, yet it happens more often than you realize. It not only affects you emotionaly; it has an impact on everybody around you as well. Nobody like owing money and nobody likes losing sleep over Debt. But what can you do to get out of the downward spiral - so often a feeling of total despair hits you.
Eight Simple Step to get out of Debt.
Well here are 8 steps to actively follow to get the ball rolling and help get you out of debt quicker than you think.
Step 1: The first thing you have to do is to admit to yourself that there is a problem. It's amazing how many people would rather ignore it, and just hope that it goes away. So, admit it, just say: "I'm in big trouble". This step actually forces you to start looking at your problems.
Step 2: Stop making Debt! Right Now.
Step 3: Create yourself a Budget for every month and determine what you're spending where. Look at your income and your expenses and determine how much you can spend on debt repayments.
Step 4: Now comes the hard part. Make a list of all your short-term debts and the full amount that is outstanding on each and every one of them. These include your credit-cards, clothing accounts and even the monthle contract with the video store. Anything that you have to make a monthly payment on where you've received credit. Don't worry about your big debts like your Mortgage and Car Payments. We'll get to those later.
Step 5: Input all of these debts into a spreadsheet and add them up. You'll find this a big eye opener. Now, you have the real picture of what you truly owe. Only now will you be able to actively start attacking your debts. Sort your debts from the smallest debt to the biggest debt. The key is to start with paying the smallest debt off first and then the next in line and so on.
Step 6: Now you need to determine how much extra you can pay every month over and above what you are already paying in monthly repayments. Look at your Budget that you created in Step 3 and see if you have a bit of extra money available from you monthy income after all your expenses have been deducted. If you do - great. If not, see where you can make cuts, such as luxury items on your grocery bill. We're not looking for a big amount, just that little extra.
Step 7: Start paying the extra money you created in Step 6 towards your smallest debt (in addition to the normal monthly repayment) and continue doing this every month until it's paid off. Once that smallest debt is paid off, you'll have some extra money available. Don't spend it! Use he money freed up to pay off the next debt in your list of debts (once again, in addition to the normal monthly fees) until this one is also paid off. What you have here is the snowball effect : Every time you pay a debt off, you'll have bigger and bigger chunks of money available to pay the next one off quickly
Step 8: You've paid off all your small debts and should have quite a pile of extra cash available every month. I know it's tempting to spend it, but the best place for that money to go is into your Mortgage - So invest your money into your own property. Why? Your mortgage is probably the biggest long term debt you will ever sign up for. For every bit of extra cash you pay into your bond in addition to your monthly payment, is offset against the capital amount of the loan. The less capital outstanding on your bond, the lower the monthly interest you have to pay over. And the added benefit is that you'll pay the mortgage loan of faster. It can make upto 3 or 5 years difference. I'm not saying use all of it, but a big chunk of that money needs to go there.
These eight steps will help you get out of debt pretty quickly - It's NOT easy, and requires you to become disciplined with your money. You can get out of the situation, but the only person who can help you out of the hole is You.
Take control. Follow these 8 simple steps. You will be on your way to become debt free in no time at all.
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