Five Steps to Debt Free Living

The economic downturn has left many Americans close to financial ruin. Working your way out of debt is not easy when it is hard to distinguish between needs and wants. If you want to become debt-free and control your own destiny, follow these five steps. They aren’t easy, but if you really want to rid yourself of unnecessary debts, don’t wait until tomorrow. Start today.

Step One: Study your current financial situation. List all your bills, debts and income. If you are married, it is important that both husband and wife sit down and do this together. Hold nothing back. It is important that you understand what you are up against. You need to treat your money like a friend you want to understand well. Discover your own strengths and weaknesses. Order a copy of your credit report and look it over carefully. For a clear picture, order one from each of the three reporting agencies and compare them.

If you are deeply in debt and do not see how you can handle getting debt-free on your own, take your information to a reliable expert like the staff at Debt Liberty, a professional credit service that gives you 24/7 online access to your account. Tell the financial counselor everything about your financial situation. Be open to suggestions for dealing with your finances. Ask any questions you may have about the best way to handle your money and then follow their advice. They can help you pay your debt down and eliminate it.

Step Two: Put a moratorium on spending. Don’t borrow money and don’t spend it on anything you don’t need. If your boat is sinking, it is important to plug up all the leaks to stay afloat. Cut up all but one credit card and remove it from your billfold. Don’t even think about consolidation loans.

Step Three: Create a working budget. Budgeting, far from being a dirty word, is vital in getting your finances into shape. Compare the list of bills you created in step one with the budget you create. Knowing where you need to cut expenses will help you get them under control. Make a spending plan that lets you prioritize your bills so you can pay them off quickly.

Step Four: Change your spending habits. To avoid impulse buying, purchase nothing immediately. Go home and think about the purchase. If you really need it, it will be worth a trip back to the store. If you are married, discuss all extra purchases with your spouse. Try to stay within your budget and do not buy anything you do not need. If your needs are greater than your income, consider earning working at a second job.

Pay your bills on time and never pay less than the minimum payment. When you can, pay more than the minimum and eliminate the bills in less time. Consider paying down your bills with the snowball effect, paying off a smaller bill and then adding that payment amount to your next lowest bill and so on.

Step Five: Cut your costs for daily living. Simple changes can add up to savings. Conserve energy by educating yourself about peak-time usage, appliance maintenance and other simple steps that will lower bills. Learn to cook from scratch and eat more meals at home. Entertain your family with free activities available in your community. Cut out any services you don’t need and reduce those you do.

Being debt-free creates a more stress-free life. Follow these steps; get your finances under control and never look back!