The Importance of Vision
Anyone who has ever accomplished anything has first had a vision of what that accomplishment would look and feel like once achieved. You may be stretched to the limit in terms of debt right now, but it is time to visualize a fantastic future of financial freedom by being debt free. It's not a pipe dream but a true possibility if you are willing to follow some very basic steps.
Get a Budget
Without a budget, there is no beginning. And you cannot have a budget unless you first know where your money goes. It is time to spend a month identifying every dollar spent and recording it. At the end of the month, take a look at where your money went. How much was spent on impulse and totally non-essential items? What would happen if you put that money toward paying down debt for a year? Most people are amazed at the way the little daily expenses add up in a big way, and you will be too.
Once you have determined what you could eliminate from your monthly expenses, you are ready to adopt a trim but reasonable budget, so you may begin a systematic plan of debt reduction. Take the smallest credit card or revolving debt you have. Determine how long it will take you to pay it off if all of your extra monthly cash were applied to it. Mark the date on your calendar. Put the date on your refrigerator. Vow that nothing will deter you from this first goal. Follow this pattern with each subsequent debt, rewarding yourself when each benchmark is attained.
If your bills are really troublesome and are not allowing good reduction with your budget, you need to consider some way of getting them all paid off and lowering your total monthly payment amount. Consolidation is the answer, and there are several options depending on your individual circumstances:
- If you own a home with equity, consider a refinance, taking out cash and paying off the debt. Your house payment may go up, but you now have a lower interest rate on that debt, and the increased house payment is far less than the total payments on the original debts. Over the lifetime of the loan, you will have saved thousands of dollars. Another option is a home equity loan, in which you avoid many fees and costs of getting a new loan altogether. Again, the new payment will be lower than the previous payments and the interest rate certainly lower.
- If you have a 401K, you can borrow from it. Again, the payments will be significantly lower, and the money you pay back to your 401K is permanent savings for your future.
- If the first two options are not viable for you, consider the services of a debt consolidator. These professionals negotiate with creditors for lower rates and loan amounts. They then assist you in securing a loan to pay off all of the debt. The interest rate will be higher than with the other options, but you will make one monthly payment and can use the leftover money to begin a savings and investment plan.
- If your debt is truly overwhelming and you are in a position of not being able to meet the monthly obligations, it is time for debt settlement. Attorneys and other professionals will negotiate with creditors for the lowest possible reduction in total debt amount and arrange a payment plan which includes their fees as well. Good debt settlement professionals will provide follow-up services so you can maintain a course of sound financial management.
Getting out of debt requires sacrifice and self-control on your part. You have to cut up those credit cards and commit to no frivolous or impulsive spending. When you are completely out of debt, however, the trip will have been well worth it.