3-Step Formula to Get Out Of Debt

3-Step Formula to Get Out Of Debt

1-Make List of Your Debts

First of all know how much deep you are in credit card debt. Many credit card holders are shocked when they know the total credit card debt to be paid. They unconsciously stay away from compiling this list. But you will have to know your total debts. List down lender name, date of debt, total amount to be paid and interest rate. Arrange list according to interest rate. Highest interest rate credit card debts should be shown first.

2-Pay Credit Card with Highest Interest Rate

Now start paying highest rate credit card first. Always pay more than minimum amount. If you are addicted to minimum payment traps then you will never be out of debt for whole of your life. Banks have arranged minimum debt trap in such way that a loan could take many years to be paid off if you are just paying in minimum amounts. Always pay more than minimum. These small extra payments will save you literally thousand dollars.

3-Start Frugal Living

For as long as you are in debt, start frugal living. Cut off your credit cards. Ask companies to not offer you more credit cards. Discard impulsive buying. Try to save every penny if possible. These few dollars added to minimum payment amounts will create a snow-ball effect towards your credit card debt payments.

Escape Debt - Consider Who Your Friends Are

Escape Debt - Consider Who Your Friends Are

Certain people are bad for your debts. Have you ever noticed how certain people encourage you to spend more heavily than others? You know, those who are always urging you to ‘stick it on your card, because you deserve a treat’. But what about the ‘treat’ when the statement arrives?

When people go shopping together they tend to egg each other on to spend money that they don’t have. You see something that you vaguely like the look of. It’s nice, but you’re undecided. Chances are that if you were on your own, you’d just put it back and move on.

But of course you aren’t alone.

Your friend turns round and says ‘oh, that’s nice’, and instantly you’ve been given all the encouragement that you need to buy it. After all, your best friend has just said that it looks ‘good on you’. And they wouldn’t lie to you, would they?

If you find that your spending is influenced according to the person who you go shopping with, the answer is simple. If you want to become debt free, just avoid shopping trips with the people who bring out the reckless spender in you!

Steer clear of these people. Especially those who engage in emotional spending to cheer themselves up! ‘Oh, I’ve lost my job, I think I’ll go and spend money to make me feel happier’. If you find this a problem, then get a punchbag and focus on destroying that instead of your financial position!

by Stuart Laing