For the first time in years, people are sensing an urgency to pay off debt as fast as possible. Up to this point, there was a false security about debt. People had well paying jobs and their futures seemed secure. Debt was no real problem. Unfortunately, all of that changed within a matter months. Many people have serious financial problems and need to learn how to pay off debt fast.
Send out an SOS
Have a meeting with your wife and children. Tell them your financial situation and explain to them the necessity of getting your debts paid off as fast as possible. Ask for their help in saving on food, water, electricity and gas. Let them know that it means there won’t be much money for extras for a time, but that will change once you are debt free.
Work out a budget you can live with
Look over your monthly expenses and your monthly income. Make up a budget, listing only the bare necessities. Make sure you set aside 10 percent of your earnings in a savings account every month. This will help you stay out of debt in case of an emergency. All extra money needs to be used towards paying down debt.
Talk it over with your wife and see what the two of you can do to generate more money. You may have to find an extra part time job. Maybe your wife can babysit, have a yard sale or find other ways to earn extra money. Be willing to do whatever you can to generate more income.
No new debts
Call all of the credit card companies except the one with the lowest interest rate, and ask them to close your account so no more purchases can be made. Let them know that you are working to pay off your credit cards, and will continue to pay them. Companies are more than willing to help you in this way.
Whatever you do, don’t make any new debt. Only take cash with you when you leave your house. Leave all of your credit cards behind so you won’t be tempted to impulse buy.
Review your debt
Sit down, and make a list of all of your debts. List the amount of interest you are paying on each one. Once that is finished, list your debts in order with the highest interest first and on down to the one with the lowest interest. If you have any debts that you have less than five payments left to finish paying them off, list them at the top of the list.
Set a goal to pay off the first debt
Your first goal is to totally pay off the debt at the top of your list. Pay as much as you can when the payment is due. Most companies allow you to make additional payments during the month, and those payments go directly to the principle of the loan. As you generate extra money during the month, put it towards the debt you are paying off.
Once you finish paying off the first debt, reward yourselves with something special, but simple and inexpensive. It’s a time to celebrate a job well done and one goal being reached.
Start on the second debt. This time you will use the money you were paying on the first debt, plus the minimum payment you have been paying on the second debt. Continue to put any extra money you can come up with during the month towards this debt.
Continue this procedure until all of your debts are paid off. Each time you finish paying off a debt, it will free a considerable amount of money that can be put towards the next debt. It will become easier and easier to pay off your debts.
If you follow this procedure and stick to the plan, you will be excited to see how you can pay off debt fast and how they will begin to disappear one by one. When the entire family is willing to sacrifice and persevere, it will make it possible to reach your goal of being debt free. Once that is accomplished, all of you can rejoice in your new found financial freedom.