Three Amazing Tips for Climbing Out of Debt

Three Amazing Tips for Climbing Out of Debt

credit cardAccording to a July 30, 2014 study from the nonpartisan Urban Institute, “Roughly 77 million Americans, or 35 percent of adults with a credit file, have a report of debt in collections.” This means that on average each of these adult owe $5,178 (median $1,349). In fact, far too many of us let their personal finances slide, ignoring the basic tools that could enable us to get greater satisfaction and joy out of everyday life.

Debt in collections involves a nonmortgage bill—such as a credit card balance, medical or utility bill—that is more than 180 days past due and has been placed in collections. 5.3 percent of people with a credit file have a report of past due debt, indicating they are between 30 and 180 days late on a nonmortgage payment.

Wow, that is a mouthful! So where do we start? Where do we go from here?

[pullquote-right]I believe that most people get stuck at this point….Many studies have linked this behavior to fear and inconsistent priorities.[/pullquote-right]

Debt can be stressful but think of how awesome you will feel when you’ve got a plan to beat it, when you’re seeing it retreat or it is squashed, when you are finally free and clear, when you have got all of that extra money sitting in the bank.   If you are determined to tackle your debts. You are not alone, I am going to share three amazing surefire ways that helped me climb out of debt.

To reduce your debt, you need to either earn more money, spend less money, or some combination of both.

The tips below involve reducing your expenses. Although it may initial appear hard, it isn’t complicated at all. If I can do it, anyone can. I didn’t have willpower. I loved the feeling of whipping out my credit card for that must-have sale just as much as the next gal; but what I found out is that I loved the gratification of what I did with all the saved money such as going on family vacations or putting a new roof on your house without having to finance it for many years out. You can too if you follow a few easy steps.   Follow this process and start climbing out of debt today:

  1. Create a monthly budget. It’s impossible to get out of debt if you don’t know how much you’re spending versus how much you’re earning.
    • Figuring out how much you’re earning each month can be determined by looking at your pay stubs from your job. Then, add in any additional income you might have, such as dividends or interest payments from investments.
    • To figure out exactly how much you’re spending each month, make a list of all of your regular monthly bills. For expenses that vary from month to month, such as groceries or entertainment, try to estimate the amount as accurately as possible.
    • After knowing how much you earn and spend, you can create a monthly budget. At first, I used a simple budget worksheet such as Mead Organizher Expense Tracker that helps you to keep track of your spending. The worksheets are awesome. They help you monitor expenses and cash flow. The tracker has 12 monthly pockets that hold bills and receipts and it allows you to tuck other items into one of two clear folders. When I truly got the hang of things, I began using an automated software program such as Quicken. But the automation is not necessary. the important part is to keep tack of you spending.
  2. Discover what things you can live without. This requires you to differentiate between wants and needs.
    • It’s easy to determine that you need food, clothing, and shelter.
    • Be prepared to sacrifice some things like cable television, eating out at restaurants, travel, and entertainment.
  3. Realize that not all money-saving methods require great sacrifice. There are some things you can do to save money without giving up the things you love.
    • Use coupons when you go to the grocery store.
    • If you need to buy clothing or other items, wait until they go on sale.
    • Bring your lunch to work rather than eating out.
    • If you have extra things lying around the house that are just taking up space, you could sell them on eBay or have a garage sale, which is in style and very chic nowadays!

The first step is the hardest one to take when you have to make a change. But, you’re now armed with the information you’ll need to climb out of debt and into abundance. Start today for a brighter tomorrow! Give me us a shout out…how are you doing with your budget? What other strategies are you using to reduce your debt?