Pay Off Debt Now: 5 Steps To Getting Your Finances in Order
By Drew Harris
In our world of dizzying change, nothing is more true than the time honored statement that circumstances always
No where is this more true than with financial issues.
Have you ever borrowed money, or charged up the VISA card at Christmas, all the while telling yourself that you
would pay everything off with a coming tax refund or bonus?
Sound familiar. And then what happens when the bonus money arrives?
Let me guess….circumstances changed, the car needed brakes (or the kids needed braces, etc), and the VISA debt
and interest charges keeps piling up.
Unless you have a plan, you will always be caught in the unpredictable grip of “changing circumstances.”
This is a slippery slope that can very quickly become serious financial stress. Consider the fact that Americans
are declaring bankruptcy at record rates. One in every 100 families is affected by a bankruptcy.
I was on this slope 10 years ago. Declaring personal bankruptcy and filing for divorce went hand in hand.
One of the most insightful moments of the process was preparing a written log for the trustee of all of our
spending for the 5 years leading up to bankruptcy.
While all of the individual decisions made sense in the moments that they were made, they looked totally foolish
in the context of the “bigger picture”
In other words, constantly changing circumstances drove us off our financial roadmap.
Consider this five step plan for getting on, and staying with, your financial roadmap.
Step No. 1: Make a list of what you owe & prioritize: Put all your bills in a pile. Then list your debts in
order, starting with the largest balance first. Then prioritize your repayments (ie paying down the highest
interest rate first).
Step No. 2: Eliminate credit cards and don’t roll over balances. Once paid off, notify the company that you want
to close the account.
Step No. 3: Make a spending plan. Change your free-spending ways. Track the money that’s coming in and going
out. Use a debit card instead of your credit card. Download your bank transactions into a computer program for easy
Step No. 4: Be careful about the equity in your home. Billions of dollars worth of equity has been withdrawn
from millions of homes in the last few years. But many people pay down credit cards only to charge them up again –
and then you don’t have the safety net of the equity in your home.
Step No. 5: Get help. For some people, the problem of overspending is a psychological one. Spending can become a
habit that’s as difficult to kick as alcohol, drugs or gambling. Sometimes, it’s due to circumstances they truly
could not avoid: medical bills or divorce or loss of a job.
You can talk with a credit counselor on a private basis. It only appears on your credit report if you enter
their debt repayment program.
During this holiday season, as you consider your finances, remember that Americans are now carrying $683 billion
in revolving credit card debt. 47% of the people who paid less than the full amount on their credit card bills in a
recent month, made only the minimum payment due.
The good news is that planning and professional help will definitely help you turn things around.
Case in point: I went from bankrupt with zero assets living in a boarding house, to gainfully employed, running
my own home based business, with 2 houses and excellent re-established credit.
In other words, it can be done.
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