Get Out Of Debt: Let’s Get Started
I NEED HELP.
I’m in debt.
I want to get out of debt.
I’m going to make the changes necessary to get out of debt.
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Question: If you make approximately $40K a year, what is a reasonable amount of debt for you to have each month?
Answer: You should spend no more than 30% of your take home income each month on housing (rent or mortgage). Additional debts (i.e. credit cards, car payments, etc) should only account for, at maximum, 10% of of your take home income. Using the $40K example above, that means that you should spend no more than $990/mth (approx.) on housing and $330(approx.) on additional debts.
The 4 Things You Need To Do To Get Out Of Debt:
* Pay Attention -> Look at your income and monitor every expense. Before you swipe your debit card, contemplate if the purchase is a WANT or a NEED. If it is a NEED, is it possible to get the purchase somewhere else at a better price? Do you really need the high quality version at this time?
Simple Trick: Pay for as much as you can by personal check. Paying by check allows you to have exact records of everything you purchased so that you may look back and see exactly what you spent most of your money on.
* Be Disciplined -> Stick to your budgeted plan. Try to pay more than the minimum on your credit cards and be sure to pay your bills on time. It takes 21 days for a new intention to become a habit! Even after that point, it is still very important to stick to your plan.
Simple Trick: Instead of carrying around your debit card, carry only what you designate as your cash allowance each week.
*Craft A Plan -> Grab a sheet of paper and a pencil and put your goals and budget on paper. Having an exact write up and plan of how you want to pay off your debts and get back on track will motivate you and let you track your progress.
Simple Trick: Put your budget on a conspicous place so that you constantly glance at it. If it’s in a place you walk past frequently you have a constant reminder of your goals.
*Do It -> What good is a well thought out plan with no follow through? Follow your plans to the best of your abilities and adjust them as you go if need be.
Simple Trick: Each time you prepare to write a check for a payment, remind yourself of one of your main goals and decide if the purchase is a necessity.
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Make sure that your family (those living with you) understand what you are doing. It will make your life just a bit easier knowing that your family understands that you are cutting back on spending. If your spouse is not 100% committed with you on your debt free goals, it will inevitably cause you to fail. You and your spouse must make all the money decisions together and in an effort to reduce your combined debt.
Its also a great idea to have some close friends jump on the band wagon with you. Having a “buddy system” with close friends has been shown to help people accomplish their goals more efficiently! You could also get in touch with some local groups in your area.
Debtors Anonymous Groups
To find a FREE meeting in your area
www.debtorsanonymous.org or write to
P.O. Box 920888 Needham, MA 02492-0009
(781)453-2743/(781)453-2745
February 3, 2010 - 9:14 am
If the Government has its way, there may be a crackdown on lenders of credit cards and store cards. If so, there may be a change in priority when it comes to the repayments of credit cards, allowing more expensive debt top priority. It is hoped that the credit card industry abandons the use of adverse order of repayments. Companies ask that consumers pay off their cheapest debt first and then move onto dearer debts now. If you are in debt with credit cards, you may wish to seek credit card debt management with a specialist.