How to Clear Up Debt
Every day the news tells us that the economy is on the road to recovery. What they don’t tell you is that it will be a slow process. Things are stable now, and that is cause for celebration. It does not, however, signal a return to our old bad money habits. That’s hard to hear, especially for Americans. We like our convenience and we’re not a patient people. We want the ease of using credit cards to bridge the paycheck gap and we want to be out of debt today. Those two concepts are mutually exclusive and the reason we got into such trouble in the first place.
You can clear debt and you can do it starting right now. This is 99% a mental game. If you can teach yourself to live below your means, then the hard work is done and you just get to sit back and watch the cash pile up. I am serious about this. If you can teach yourself to spend $50 less from each paycheck, you will have $1,000 in the bank in less than a year. Save $100 a paycheck and you will have $1,000 in 5 months.
Because we are addicted to fast solutions, Americans are drawn to debt consolidation plans. Debit consolidation is fine for people with serious debt issues. If you are looking at $75,000 in credit card debt, then yeah, consolidation of debt is not a bad idea. $5,000 or even $20,000 does not warrant the fees that go with consolidating credit card debt.
The voice in your head that tells you clear my debt should be heard, but don’t let it drive you to a rash act like bankruptcy. Are you working? Then you are not bankrupt. Just take a deep breath and look at your monthly bills. Really look at them. Where does your money go? Does it seem like every dime go to pay the minimum payments on credit card debt? List out your debts, smallest to largest and see how much it comes to. Now list the minimum payments for each debt. How much is that? How much money do you spend on food? How much for your car payment? Getting a written budget is the best tool in the fight for your financial freedom. Once you see where your money goes each month, you can make rational decisions about it. Can you lower your grocery bill? How about clothing or coffee? How much would you save if you stopped buying a latte every workday?
I am not suggesting that you live like a hermit, eating beans and rice for every meal. What a written budget does is show you where the money is leaking out. Because I can guarantee you that money is leaking out of your account and until you really look at your bills, you will never know where to apply the fix. Maybe your car is too expensive for you and until you look at your bills all together, you’ll never know that the car costs as much as your rent.
It is not easy to sit down and face the bills. People don’t want to be reminded of indulgent purchases (Why did I buy those $200 cowboy boots, you may ask yourself) or face the idea of cutting back on life’s luxuries. It has to be done, however, if you are ever going to clear up your debt. Do it right now. No time like the present to begin your journey out of debt.
