Whether you wanted to or not, at some point in your life you have gone into debt. If you are reading this today, that likely means you are in debt and wanting to get out of debt. While it can’t be done overnight, here are 7 Steps To Becoming Debt Free This Year. Some of these things are classic and may come as no surprise, other things are fairly extreme, but could be considered necessary if your goal really is to get out of debt within the next year.
7 STEPS TO BECOMING DEBT FREE THIS YEAR
Stop Using Credit: While it may seem obvious, a lot of people continue using their credit cards, buying new cars or even buying new homes all while seemingly trying to eliminate debt. The first step to getting out of debt is putting a stop to unnecessary spending. Cut up the cards, forget the upgrades and stop using credit.
Understand The Difference Between Wants Versus Needs: This one hurts more than the others. Learning that there is a distinct difference between wants and needs can be an easy lesson, or a very tough one. We are so use to having unlimited texting and data, hundreds of cable channels and gourmet coffee that we have forgotten all of those are wants and not needs. Your only real needs are food, shelter and a minimal amount of clothing. Take a step back and look at your spending habits to determine if your money is going to wants or needs.
Negotiate Settlements: This can cause issues on your tax return, but it can also be a great benefit if you need and want to get out of debt now instead of later. Weigh all the options before negotiating a settlement. It can effect your credit score as well, so if the goal is to buy a home later down the road, this may not be good for you. If you think it is, give your creditor a call and see what terms they are willing to work within.
Consolidate For Lower Interest: While getting a new credit card or taking out a new loan violates the first step, there are exceptions when it comes to consolidation. If you are able to consolidate all of your debt into one monthly payment at a lower interest rate, it will be to your benefit. Start looking into consolidation options that suit your needs.
Take On Extra Jobs: Do you have time or skill for a second job? Now is the time to make that happen. A 3-4 night a week part time job can bring in a lot of extra income potential. If you have kids at home, this may only be an option if both parents are in the home. Start looking and consider expanding to a second job today.
Downsize Your Home, Autos & More: Sometimes we simply live outside our means. If you don’t need the largest home, multiple cars, a boat or motorcycle, it may be time to downsize and sell out. Selling one of your vehicles can bring about less debt and a nice income to pay toward other debts. Renting out your basement, garage apartment or selling outright can help pay off debt and free up some of your income for other purposes.
Take A No Spending Vow: Stop buying until what you have on hand is used. This applies to groceries, clothing, household supplies and entertainment for most families. A no spending vow can be a month to month challenge you can take on to help free up money in your budget to go toward becoming debt free this year.
Whatever steps you choose, it is possible to become debt free this year. Dedication, truly looking at your expenses for what they are and working with your spouse and family can make this a possibility.