6 Tips to fight your debts to achieve Financial Freedom
This is an articles that I joined from the following post :
Debt Control – Debt Fighting Tips, Part 1
Debt Control – Debt Fighting Tips, Part 2 : Stop Getting New Debts
Debt Control – Debt Fighting Tips, Part 3 : Live on Cash Basis
Debt Control – Debt Fighting Tips, Part 4 : Get Handle on Your Situation
Debt Control – Debt Fighting Tips, Part 5 : Prepare a budget
Debt Control – Debt Fighting Tips, Part 6 : Keep Thinking Long Term
Nowadays, most people have debts. However, not everybody knows how to handle the debt and some even trying so hard to escape from the reality of debts. No matter where you want to go financially, you must know how to deal with your debts. This is the rules. So are you ready to control your debt?
Ok, if you ready, the road to financial freedom is start right now. This is not a kind of thing that you need to think about and decide for a day or a week. You make your decision and take action! The more you delay, the more you will suffer from debts.
Debt fighting tips number 1 : Stop Incurring new debt.
You will never get out of debt by borrowing more money. I saw a lot of people, most of the time; they always get a new debt to cover their old one. But this doesn’t help us to go anywhere.
The first step to control your debt is – you guessed it – is cut up your credit cards.
Credit cards, most of the time, are the easiest way we get money from and go into debts. This is why the first step is cut up the credit cards.
You don’t have to cancel you accounts. In fact, cancel your account doesn’t guaranteed you know how to control your debts. However if you hold your account, you probably be better for your credit rating in the long run. What you should do is just stop charging those accounts.
Ok, action time. Go ahead and do it. You won’t lose anything and you won’t feel any pain. The good news is you can always order a new card if you want to. It just a plastic card, after all.
Debt fighting tips number 2 : Live On Cash Basis
We all have credit cards. According to reports, USA, with a population of about 294 million, managed to have over a billion credit cards in issue. That’s over 4 cards for every man women and child. About 20,000 different cards are on offer from suppliers. This means almost every USA citizens have credit cards. I know this plastic card really gives you a lot of convenient. But if you don’t know how to use it, this convenience will give you another “gift†– DEBTS. This is why more and more people who own a credit card, get into debt so easy.
Now, try to put this idea into your mind and get used of it right now. Until your debt is under control, you must buy everything using with cash.
It’s not that difficult and it’ll get easier and easier. Just want to remind you, before the credit cards appear in this world, we buy thing using our cash! So you will get used of this life without credit cards easily.
Once you’ve achieved financial freedom and your debt is under control, then you can get back to the cashless life. But! You must know how to use credit cards wisely. If not you will repeat the history of getting debts!
But until then buy things that you have cash for them. Setup a goal, plan it in your budget, and buy things that you want to.
Debt fighting tips number 3 : Get Handle on Your Situation
Do you know how you spend money monthly? Do you know how much is your debts? Do you know their interest rate? Or the most important – Do you have a clear picture of your debts?
Sorry for throwing you so many questions in starting of this post. But we really need to ask ourselves those questions. Before we solve a problem, we need to have a clear picture on the problem and then make a plan to solve it. So before we solve our debt problems, we must get handle on the situation.
Ok, now, after reading this, what you should do is sit down with all your paperwork. Gather all your bills, statements, everything relating to your debt. Remember to make sure everything is as current as possible. It is wise if you bring your credit report with you so you can include you any old debts listed there.
Add up all your debt first and get a big picture, how much do you owe? Then you list down all the debts so you can identify what you owe and to whom, what your monthly payments and when It is due.
Once you list down all of them, you will have a clear picture on it. You maybe shock and surprise when seeing the reports that you make. But it just starting….
PS: I saw a lot of people who can’t or DON’T WANT to do this. Why? BECAUSE THEY DON’T DARE TO ACCEPT THE REALITY! So they will give a lot of reasons to make them avoid this. Anyway there are no one can help you except you help yourself first. Yes I saw a lot of people will run away from doing this little paper works and continue their life without a lot of stress. I hope you are not 1 of them.
Debt fighting tips number 4 : Prepare a budget
No matter what method you use, you’ve got to create a budget if you want to be financial free and debt free. Maybe you hear enough from others that budget is not working and you just live beyond your meaning. However what I think is budget is important and work. ONLY if you decide and ready to take actions.
Actually budget do work if you do them right. You will control and spend your money more wisely, simply because a budget is a plan that will guide you how to spend your money on your personal financial goals. No financial dream, like financial freedom, can come true without a plan like budget. I can guarantee!
In my past post, “Budget To Financial Freedom – What make your budget fail?â€Â. It is about reasons why your budget fails. You may have a look on the post and you will find out roughly the basic problems that most people make until their budget fail and make conclusion that budget is not working.
Debt fighting tips number 5 : Keep Thinking Long Term
Debt Fighting is a long journey to everybody. You’re not going to be success in overnight, but if you don’t give up you will success. Please prepare your mind that you are going to have some difficulties, but that’s ok, your future will be bright. Keep Thinking Long Term.
As I said, it isn’t an overnight process to fight debt, and you have to keep an eye on your destination. It probably will take few years to be success and at this time keep thinking long term is very important. Your goal for the future, things you need to get in your future, financial status that you dream will give you power to take actions and continue. So take some times, sit down, and think about what you want to get in future, make decision and take action. No matter what happen and how difficult it is, just keep thinking long term – Your Future.
When we spend our money, we also must think long term. What does it mean? Let me give you a little example.
Christmas is around the corner, you want to get a Big Screen TV for this Christmas. You pay $2000 with credit cards that charge 20% interest. You pay the minimum monthly payment of 2 percent of the balance. So you have to take 40 years to pay off the debt and costing you more than $8000 of interest. So if you can think in long term, the day you buy your big screen TV at $2000, you probably will know it will more than $2000. So does it worth it at that time?
What if you take the $2000, in cash and invest it in a fund that can give you 2% monthly interest. So the story will be different. For the same time, you can get back more than $8000 of interest. Then at that time you can buy your big screen TV with CASH!
The point to think long term is you must think and plan, do some math before you spend your money. Delay your gratification first and you will get even more after this.
