I have a guest post for you today from Reelika over at Financially Wise on Heels. Reelika explains some great steps that you can take today to begin making your way out of debt. Don’t forget to head on over to Reelika’s blog once you’ve finished reading this!
B?ing in d?bt ??n be a ?tr???ful ?x??ri?n??. N? m?tt?r wh?t ??ur ?ir?um?t?n??s are, if ??u ?ign?d f?r a loan, ??u ?r? ?blig?t?d t? ??? it b??k ?v?n if ??u have a lif? ?lt?ring ?x??ri?n?? lik? l??ing a j?b, g?tting int? ?n ???id?nt, ?r ?v?n if ??u h?v? in?r????d ?x??n??? du? t? h?ving a ?hild.
M?n? ????l? tr? t? g?t ?ut ?f d?bt, but lif? ?l??? th?m in th? f??? h?rd ?n?ugh th?t th?? giv? up. Th?t d???n’t h?v? to b? the case.
H?r? ?r? 5 ?im?l? ?t??? to h?l? ??u ?limin?t? ??ur d?bt ?r?nt?:
1. M?k? a conscious d??i?i?n t? ?t?? borrowing m?n??
If you w?nt t? get ?ut ?f d?bt f??t, ??u h?v? to stop u?ing d?bt t? fund ??ur lif??t?l?. Thi? m??n? no m?r? financing furniture, n? m?r? signing u? f?r ?r?dit ??rd?, n? m?r? test driving br?nd n?w ??r? th?t you d?n’t h?v? th? ???h t? ??? f?r. Thi? will h?l? you f??u? solely on the d?bt th?t ??u ?urr?ntl? d? have ?? th?t ??u ??n d?v?l?? a g?m? ?l?n t? ??? it ?ff ?ui?kl?.
2. E?t?bli?h a ?t?rt?r em?rg?n?? fund ?f $1000
You might b? wondering, ‘Wh? i? h?ving ?n ?m?rg?n?? fund important?’ Well, if you d?n’t h?v? ?n? money in th? b?nk ?nd ?n ?m?rg?n?? d??? h????n, h?w are ??u g?ing to ??? f?r it? F?r m??t ????l?, ?r?dit ??rd? b???m? th? funding ??ur?? f?r th??? ?m?rg?n?i??. If ??u ?r? tr?ing to g?t out ?f d?bt th?n ??u n??d t? ?ut a buff?r b?tw??n ??u ?nd d?bt; th?t i? ?x??tl? wh?t ?n ?m?rg?n?? fund d???.
3. Cr??t? a realistic budget ?nd ?ti?k t? it
D?v?l??ing a budg?t th?t tr??k? ??ur in??m? ?nd ??ur ?x??n??? i? ?ru?i?l to g?tting ?ut ?f d?bt in a ?h?rt ??ri?d ?f time. It will h?l? ??u g?ug? wh?r? ??u ?r? with ??ur finances ?? th?t ??u ??n m?v? f?rw?rd toward ??ur g??l. It will ?x???? wh?th?r ??u h?v? m?n?? l?ft ?v?r, whi?h i? ??ll?d a ?ur?lu?, ?r if ??u are in th? n?g?tiv?, whi?h i? ??ll?d a d?fi?it. Th? g??l i? t? in?r???? your ?ur?lu? ?nd u?? th?t m?n?? t? ??? d?wn ??ur d?bt. B?l?w ?r? tw? w??? th?t ??u ??n d? this.
- Th? fir?t w?? i? t? ??rn ??m? ?xtr? ???h. If ??u ?r? in a ??mmi??i?n-b???d j?b th?n this m??n? th?t ??u n??d t? m?k? m?r? sales, whi?h will ?r?b?bl? inv?lv? h?ving t? w?rk m?r? h?ur?. If ??u ?r? in a ??l?r? j?b and ??u ?r? limit?d in th? h?ur? th?t ??u ??n w?rk, th?n ??u might n??d t? ?i?k u? a ????nd j?b.
- Th? ????nd thing th?t ??u ??n d? is trim ??ur ?x??n???. G? ?v?r ???h lin? it?m on ??ur budg?t ?nd ??k ??ur??lf, ‘h?w ??n I m?k? thi? numb?r ?m?ll?r?’ It may inv?lv? ??n??lling ??rvi??? th?t ??u rarely u?? lik? a g?m m?mb?r?hi?, N?tflix ?ub??ri?ti?n, ?t?. It might ?v?n inv?lv? reducing th? amount ?f tim?? th?t ??u ??t ?ut ?t r??t?ur?nt? ???h month. The ?m?unt th?t ??u ?l??h d???nd? u??n ??ur ??mmitm?nt l?v?l t? g?tting ?ut of d?bt. Th? more ??mmitt?d you ?r?, th? ???i?r it will b? f?r ??u t? giv? u? some ?f th? unn??????r? ?m?niti?? in lif?. Y?u might not ?v?n n??d t? ???rifi?? mu?h if ??u ??n find th??? it?m? ?r ??rvi??? f?r l???.
4. Org?niz? ??ur d?bt
Thi? i? ??r?m?unt t? m???ing ?ut a ?l?n t? ??? ?ff ??ur d?bt. Th?r? ?r? tw? ???r???h?? th?t ?r? w?rth ??n?id?ring. Th? fir?t is wh?r? ??u li?t ??ur d?bt? ?m?ll??t t? l?rg??t r?g?rdl??? ?f th? int?r??t r?t?. Wh?n w? paid ?ff ?ur fir?t d?bt it put wind in ?ur ??il?. Ev?n th?ugh w? h?d high?r int?r??t d?bt?, this g?v? u? ??m?thing th?t w?? very ??w?rful: th? b?li?f th?t w? ??uld g?t ?ut ?f d?bt ?ui?kl? if w? ?tu?k t? th? ?l?n.
Th? ?th?r m?th?d i? ??ll?d l?dd?ring. Thi? i? wh?r? ??u li?t ??ur d?bt?, ?t?rting with th? high??t int?r??t r?t? first ?nd ?nd with th? debt with th? l?w??t int?r??t r?t?. Thi? m?th?d m?k?? th? m??t m?th?m?ti??l ??n??, because ??u will ??v? th? m??t m?n?? in int?r??t ?v?r tim?. R?g?rdl??? ?f which ?r????? ??u ?h????, th? key is t? ?ti?k with it.
5. Thr?w ?n? ?x???? ???h ?t ??ur debt
Wh?n w? w?r? g?tting ?ut ?f d?bt, there w?r? ??v?r?l times wh?r? ?xtr? m?n?? f?ll in ?ur l??? th?t w? h?d n?t f??t?r?d int? ?ur d?bt ?limin?ti?n originally. W? d??id?d t? t?k? thi? cash ?nd use it t? t??kl? ?ur d?bt. S?m? g??d ?x?m?l?? w?uld b? a t?x r?fund, ??lling a ??r, ?n inh?rit?n??, winning a b?t, ?t?. Th? m?r? ???h ??u can put t?w?rd? ??ur d?bt, the f??t?r it will di??????r.
The Bottom Line
D?bt d???n’t h?v? t? be f?r?v?r. D?v?l?? ??ur fin?n?i?l g?m? plan ?nd ?t?rt ??ur j?urn?? t?w?rd b?ing d?bt-fr?? t?d??. The key is to be consistent and to stick to the plan.
Which money habits have helped you during your debt-free journey? Share in comments below!
About the author: Reelika Tiik works as an Internal Controller. She is also an online entrepreneur and the founder of FinanciallyWiseOnHeels.com, where she provides inspiration, tools and resources to women to start their own business, and better manage their finances without sacrificing the needs and dreams of their families.
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12 Comments
I think one of the biggest things is getting organized. It’s so hard to have things all over the place and to formulate and action plan unless you get all of your ducks in a row.
I couldn’t agree more, Tonya!
Reelika @Financially Wise On Heels recently posted…Simplify Your Life to Find the Real You
Tonya you hit the nail on the head. My problem other than procrastination is being unorganized and lately I have been working on this which has helped me learn how to plan and strategize
Good list though I would add one more item at the very beginning: Figure out how much debt you have. It sounds pretty simple but if you asked people how much debt they have, I’m guessing that a lot of people would take guesses. This is not a good path to success. The first thing you have to do is add up every single bit of debt you have, and only then can you truly start attacking it.
Money Beagle recently posted…Tweaking My To-Do List To Improve Productivity
That’s a great point for sure!
Reelika @Financially Wise On Heels recently posted…Simplify Your Life to Find the Real You
Having an emergency fund is so extremely helpful. I always recommend that EVERYONE has one!
Great post!
Michelle recently posted…Why Everyone Should Be Aware Of Their Financial Situation
Absolutely, one should have an emergency fund that covers at least 3 months expenses, however, if you have no emergency fund at all, you should at least establish a starter one.
Reelika @Financially Wise On Heels recently posted…Simplify Your Life to Find the Real You
I agree that getting your finances organized and a plan to eliminate debt in place is integral. My big thing was how discouraged I’d get when we had to take a step backward. (Two people, three chronic health conditions, lots of doctors bills.)
So I think another key aspect is not freaking out when circumstances force you to take a step back. Either your EF doesn’t cover the expense, or needing to refund the EF the month after means you barely touch your debt. Anything like that. You just have to breathe deeply and remind yourself that you’re doing the best you can. And if applicable, see if there’s a way to avoid the issue in the future.
Abigail @ipickuppennies recently posted…Baby got cash: A financial ode to Sir Mix-a-Lot
That is true. It is important to learn from past, from our mistakes as well as success, and do your best. Life doesn’t always go the way we expect, but we need to remain positive and avoid previous mistakes.
Reelika @Financially Wise On Heels recently posted…Simplify Your Life to Find the Real You
I think the most important word about making a budget is “realistic”. If you try to cut your expenses in a category by 50% all at once, you’re not likely to achieve your goal and you’ll only get discouraged in the process. But if you try to cut it by 5% one month, and then even more the next month, you’ll make real progress. Getting into debt probably didn’t happen overnight and getting out of it will take time as well.
Gary @ Super Saving Tips recently posted…Black Friday Shopping Tips to Save You Time & Money
Great ideas! I do want to have a bit more than $1,000 in my EF while paying off debt though as that is what helps me sleep at night.
Kayla @ Shoeaholicnomore recently posted…Financially Savvy Saturdays One Hundred Fourteenth Edition
I like that you actually listed earn more cash before cutting expenses. I think both need to happen to be really successful in tackling your debt, but so many people get stuck in thrifty mode and mastering frugality, which is terrific, but can only get you so far. To make the biggest dent in your debt, I think you need to pick up a second income stream and chuck all that money towards paying it off.
Mel recently posted…Financially Savvy Saturdays #114