![]() There are two trains of thought & popular strategies. What is the Best Way to Pay Off Your Debts? Then you have to make a plan for how you will pay your debts off. Any extra you squeeze out of the budget should go to debt. This is the “Live on Less Than You Make” scenario. This step is the hardest because you need to cut your lifestyle in every category if you are really serious about getting out of debt. Once you have an idea how much you spend, decide where you can cut back. Set up a spreadsheet on paper or electronically and enter expense categories such as mortgage, utilities, food, gas, car, medical, debt, entertainment, childcare, misc. Track your spending for a month to see where every penny goes. ![]() ![]() Keep your emergency fund accessible either as cash or in a simple savings account at your favorite bank. Without an emergency fund you will end up using a credit card for those unforeseen issues like car repair, doctor visits, broken plumbing, etc. This can be as much as you like but no less than $1,000. In addition to popular mainstream commentators like Suze Orman & Dave Ramsey, there are a number of influential alternative voices online like Mr Money Mustache, Ramit Sethi & hundreds of others. Personal financial gurus can help provide inspiration and boost willpower. ![]() Debt is an emotional thing so use that emotion to help drive you to your goal. Explain how it makes you feel and how you envision your lives without this weight on your shoulders. Have a heart to heart talk about your debt. If you have a spouse or significant other they will need to join you on this journey or they will sabotage your efforts. If you are single you only need to convince yourself of your new plan. See buying as pain and denying oneself as pleasure because it will ultimately lead to the pleasure of debt freedom. Your Debt Freedom Plan Be aware of the pain/pleasure dichotomy & consciously rewire your brain Why do you think every department store offers their own credit card? They know it's less painful to use a credit card for purchases and that consumers tend to purchase more when spending with a credit card vs. It provides a momentary pleasure while delaying the ultimate pain of payment. Credit falsely balances the pain/pleasure dichotomy. Buying things is pleasurable while denying ourselves is painful. We move towards pleasure and away from pain. The Harsh, but Treatable Symptom of Debtĭebt is a symptom of the pain/pleasure dichotomy. Millions are jumping on the debt freedom bandwagon and here are a few steps to guide your way. Put on your blinders, satisfy our needs but ignore your wants. So learn a lesson from your grandparents – be disciplined to reach your debt freedom goal. Many today have confused their wants and needs which has driven them to buy unnecessarily which in turn slid them deeper into debt. They saved and bought after they had money. ![]() They were disciplined and knew the difference between their wants and needs. They were not subjected, as you are, to the constant barrage of advertisement at every turn of this modern technological world. This is not the same world of your grandparents where credit was difficult to obtain and the equity line of credit unknown. We have been encouraged to buy now and pay later. Everyone has debt, right? Over the last several decades we have been lulled into believing that debt is a necessary part of life. It's what makes the financial world turn. Dinner at a restaurant will taste so much better knowing you are well on your way to being debt free. It's a smart calculator.Īfter you decide on your debt payment plan, remember to reward yourself a little with each credit card or loan you eliminate. No need to enter dollar signs, commas or percent symbols. The calculator will populate the three lower spaces to show your monthly payment, number of months needed to pay off the debt, and the interest you are spending to have this debt. Simply enter your loan amount and interest rate and choose the date you would like to see the debt eliminated. To see how much interest you are wasting on loans and credit cards use the calculator above. ![]()
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