Become Debt Free in Seven Steps
A debt free life is attainable even for those with serious financial concerns. We'll tell you how to become free of debt in seven steps.
- Own the problem. For many consumers, debt is very similar to an addiction. As with other vices, it's important to acknowledge that you have a debt problem before you proceed with a solution.
- Get assistance from a professional. Whether you seek out a credit counselor or a debt consolidation service, you're going to need some kind of professional intervention for real results. Most cities have credit counseling agencies that can offer help for free or close to free. You can also pursue debt consolidation from an online service.
- Evaluate your situation. With the assistance of a debt counselor or consolidation representative, assess your current financial circumstances. To become debt free, you will need to know how much you owe, what you interest rates are, etc. You might also examine your monthly expenses and cash flow to get a more complete picture of your finances.
- Start or revise your budget. Budgeting can be a hassle, but it is necessary if you want to get debt free. If you don't budget, look to your credit counselor or consolidation service for guidance on how to do so. If you already have a budget, chances are it is not working. Revisit what you allot for various expenses and make adjustments until you have a little cushion left over at the end of the month after paying bills.
- Bargain with your creditors. Especially for consumers who are in danger of not being able to make payments, creditors are typically pretty willing to negotiate interest rates. You might try to bargain with them on your own, perhaps using a balance transfer threat as leverage. If you are not successful, you may have your consolidation company or credit counselor give it a try.
- Make payments consistently. Once you've managed to make your interest rates more affordable, you must commit yourself to making consistent, on-time payments. Becoming debt free is not easy; it will take fiscal discipline and dedication, but it can be done.
- Do not take on any new debt. It may seem obvious, but you should not undertake any new financial obligations while becoming debt free. This means that you need to stop using your credit cards and hold off on installment loans (e.g., a new-car loan).
