Ideas to Get Out of Debt

Plan

I ran across a little plan to get out of debt that really works if you just stick to it. Here it is:

1. Begin with your debt that has the highest rate of interest. Now pay the minumum payment plus 5%-10% of your monthly income, whatever you can commit to on a regular basis. Continue to pay the minimum payment on all other bills for now.
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2. When the first bill is paid off (WOOHOO!) take the amount of the 1st bill's min. pay.+ the 5%-10% that you had been putting onto the 1st bill and add that to the min. pay. for the second bill. Pay this every month until the second bill is paid in full. Continue to pay the min. pay on your other bills.

3. Now that you have the second bill paid off, take the min. pay. from the 1st bill, the min. pay. from the second bill, and the 5%-10%, and add this to the min. pay. for the 3rd bill. Now you are making a nice payment to this bill and it is being paid off more quickly than usual. Of course, continue to pay the minimum payment on your other bills. Keep up the good work!

4. By the time you get to the 4th bill you are making what will seem like lump sums to paying off this bill. The trick is to keep the money that you were putting on bills going to paying off bills instead of incurring more bills with the extra money each month.

As with anything, this takes time, and as a result, takes patience.

I would also add that you must begin to live more frugally, learn to tell a want from a need, and enjoy the contentment that can come from being in control of your finances instead of them controlling you.

Fab4mom

First Step: Get Rid of Credit Cards

This is not something that is easily or quickly done. The first thing you need to do is get rid of any credit cards. Make as much as you can for payments on any loans or credit card bills you currently have. Before you ever borrow money for something make sure that it really needs to happen.

I am 31 years old and own my home (owe nothing), I drive an older car that I saved money for and paid cash. I only have to pay monthly living expense bills. Due to this when I lost my job the beginning of this year we were able to survive on my husbands income.

Our rule of thumb is if we can't pay for it now we don't have to have it. If we really want it then we save for it. My husband just built a garage this summer that we paid for with money that he has saved for the past 5 years. It would have been nice to have the garage 5 years ago but we survived with out it.

By Pattie Hartley

Start Paying off Highest Intrest Debts First

1. Dont make any new debts.

2. Pay off your debts starting with the one charging the highest interest. Make minimum payments on the others.

3. When you get the one charging the highest interest paid off, start on the one with the 2nd highest interest and pay that one off, and so on. Do this until all debts are paid including your car and your house. Do not acquire any more debts until all your current debts are paid off.

Make a distinction between "wants" and "needs."

By Carol

Cut Out the Extras

Sit down and really look at your bills. Is there anything you can cut? For example: Keep the basic phone service but get rid of call forwarding, call screening, and anything else you are paying extra for. Keep the basic cable but get rid of the "premium" channels. Do you subscribe to lots of magazines? I was shocked and appalled to realize how much money I spent on subscriptions. $10 here and $10 there adds up and I hardly had time to read them anyway! I contacted all my magazines and asked them to stop service immediately due to "financial difficulties" and refund the unused portion of what I had pre-paid. I wound up getting about $30 back!

The secret is, whatever money you get back, you add to any other "found money" (like the amount you have saved by reducing other services) and you apply this money to your debt. Another huge difference for me was sending an additional payment as soon as I received "found money" instead of waiting to send it when the bill was due.

Your credit card company or other people you owe money to will be happy to accept a payment at mid-billing-cycle, call and get instructions, and be sure to put your account number on the check. That way, you won't be tempted to spend the money on anything less important than getting out of debt.YOU CAN DO IT!!!!

By Becki in Indiana

Monitor Your Spending Habits

First, spend 2 weeks-a month writing down every penny spent. Even the quarters you drop in the charity bin. You'll be surprised how much the little things add up.

Then use your red pen to mark the unnecessary expenditures. Entertainment and convenience foods are big ones. These expenditures can be cut, and the money used towards paying off debt.

Figure out what you owe, and how much "extra" in fees you are paying everyone. Pay off the highest interest/lowest bills first. Hospital and college loans usually can wait the longest, don't put those on credit if you can make a deal. Pay minimum payments on all but one bill and put *everything you can* into that one bill. Once its paid off, do the same with the next card. If you have Discover or another card with good rewards, use it for groceries, pay it off completely each month, and use the rewards to pay extra bills or to buy essentials.

The important thing is to cut your spending so you can pay off bills ASAP.