Welcome to the American dream – get into as much debt as possible. Oh yeah, that’s not the dream, just the reality of what happens. What was the dream again? Whatever it was or is suppose to be, most people these days dream of being debt free. So get ready to dream while I share 7 ways to get debt free in 2014.
Stop Spending Money You Don’t Have
The logic behind this is indisputable. Yet aren’t we all guilty of spending money we don’t have or overspending on occasions and experiencing a little buyer’s remorse. Loans and credit cards make it easy to buy that new car, television, boat or even a riding lawnmower with four wheel drive that we don’t really need. Lesson number one: stop spending money you don’t have. Only use your credit cards for emergencies or spend what you have budgeted to pay them off each month.
Create A Budget and Use It
Your budget is your best friend. It will support you to become debt free, but you’ll need to listen. Follow these steps when creating your budget:
- Get all of your financial records together
- Make a list of all of your sources of income
- Make a note of your total monthly income
- Make a list of all of your monthly expenses
- Separate your expenses into fixed and variable
- Total your monthly income and monthly expenses. Any excess income, you will want to put into your expenses list for things like savings, retirement, investments, etc.
- Make sure to allocate all of your income so that your income column equals your expense column.
- Review your budget monthly. Pay close attention to variable expenses. Make adjustments as necessary.
Create An Emergency Fund
An emergency fund is extremely important. An emergency can deplete your income and make you feel hopeless. You will want to make your emergency fund part of your budget. Be sure to contribute to this fund weekly or monthly and don’t ever touch it unless it is actually an emergency. Consider opening a separate savings account that is only used in case of emergencies.
Create and Monitor An Online Checking Account
An online checking account is easy to monitor. Monitor at least every other day or once a week. Having an online checking account keeps you up-to-date daily with what is being spent and deposited. Being on top of your finances keeps you on track to achieve your goals.
Utilize A Plan of Attack Approach For Existing Debt
This is a great way to not only get rid of debt but to begin to see the light at the end of the tunnel – commonly known as hope. Follow these steps to become debt free this year:
- Create a list of all your accounts, including loans and credit cards, you owe money on
- Put the accounts you owe the least on at the top of the list from least to most, but keep in mind the interest rates being charged
- Pay the minimum payment for each account, except the account at the top of the list
- Take all the extra money you can get your hands on and pay it toward the account at the top of the list
- Once the account at the top of your list is paid off – move down to the next account and repeat until all accounts are paid
Work On Increasing The Gap Between Income and Expenses
Commonly known as living below your means, this can be accomplished in two ways. One, increase your income. Two, decrease your spending. Figure out how you can save on those variable expenses. Figure out how you can make a little extra cash.
Buy Used Instead of New
You don’t always need to purchase everything brand new. You can get great deals on used items. Consider buying the following items used:
- Video game consoles/systems
Tis the season to be fearless. You can overcome your debt in 2014 as long as you’re brave enough to accept the challenge.