It's a myth that only the rich can be debt-free. The truth is that anyone can become debt-free. True debt reduction is plain common sense and hard work.
Debt Snowball Plan
The principle is to stop everything except minimum payments and focus on one thing at a time. Otherwise, nothing gets accomplished because all your effort is diluted. First accumulate $1,000 cash as an emergency fund. Then begin intensely getting rid of all debt (except the house) using my debt snowball plan. List your debts in order with the smallest payoff or balance first. Do not be concerned with interest rates or terms unless two debts have similar payoffs, then list the higher interest rate debt first. Paying the little debts off first gives you quick feedback, and you are more likely to stay with the plan.
Build Momentum
Redo this each time you pay off a debt, so you can see how close you are getting to freedom. Keep the old papers to wallpaper the bathroom in your new debt-free house. The New Payment is found by adding all the payments on the debts listed above that item to the payment you are working on, so you have compounding payments which will get you out of debt very quickly. Payments Remaining is the number of payments remaining when you get down the snowball to that item. Cumulative Payments is the total payments needed, including the snowball, to pay off that item. In other words, this is your running total for Payments Remaining.
Debt Free!
You attack the smallest debt first, still maintaining minimum payments on everything else. Do what is necessary to focus your attention. Keep stepping up to the next larger bill. After the credit debt is taken care of, you are ready for the next Baby Step in your Total Money Makeover.
I have been broke. I know how scared I felt, and I know how fast I wanted to get out of debt. I know how you feel, and I have learned that what really works is unbelievably fierce, focused intensity.
A biblically based curriculum that teaches people how to handle money God's ways
We all need a plan for our money. Financial Peace University is that plan! It teaches God's ways of handling money. Through video teaching, class discussions and interactive small group activities, FPU presents biblical, practical steps to get from where you are to where you've dreamed you could be. This plan will show you how to get rid of debt, manage your money, spend and save wisely, and much more!
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How I Got Out Of Debt | |
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| Education | Upload TimePublished on 28 Jan 2013 |
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