5 Tips to Start Your Path to a Debt-Free Life NOW!

October 15, 2012 | Posted By: Stella Walker | Categorized in: Finance
Feeling financially overwhelmed is an emotional experience. Guilt, shame, frustration and even fear are often felt by those who feel buried in debt.

Eventually, the emotions associated with your debt will begin to take their toll on you. They may cause you to shy away from facing your debt; and they can even make you spend more to maintain the borrowed lifestyle youíve built. Itís time to break away from all of these emotions and take control.

1. Accept your Income.

The first step of getting out of debt is reaching acceptance. You must accept your income as a rigid, constant variable. As Americans, we are always looking forward to the future, for a ďbetterĒ time, when the economy will be more fruitful or when we will land the dream job we need to pay off our debt.

If you are financially overwhelmed, you absolutely cannot afford to think this way. Your personal finances may not be ideal, but you will never be able to afford a better lifestyle if you fail to develop financial discipline. If you sit around on a pile of debt waiting for the world to change (or to win the lottery), youíre simply not facing reality.

2. Face the figures.

Take off your blinders, grab a calculator and write down the amount you have charged to each account. Include the APR as well as your monthly payment. Now, use a credit card calculator to evaluate the amount of time it will take you to pay off your debt under your current payment plan.

Ok, take a deep breath. I know how hard it can be. Iíve been there.

3. Map out your expenses.

Now that youíve accepted your income and your debt, itís time to look at your spending habits. What are you using your money for? Are you playing with it? Or are you building with it? If youíre serious about getting out of debt, itís time to use your money to build.
And your first project is to build a ladder to get out of the financial hole youíve dug for yourself.

Look at your bank statement right now. (Seriously, if you have online banking, login right now.) How much you spend on coffee, treats, clothes, dining and entertainment? These are the big categories that can be slashed in your budget.

If you feel as though you donít have any wiggle room, look more closely. Can you cut back your grocery budget? Can you live without cable? Can you use less electricity or carpool to save costs on gas? There are many different ways to save money; you just have to find them.

4. Start living on a budget.

Itís commonly said that part of being rich is living as though you are poor. Now that you are committed to changing your lifestyle and building your wealth, you need to focus on structuring a budget for your expendable income. This is what you spend after bills (rent, utilities, phone, credit cards and other payments).

Look at the money you can afford to live without and allocate this money to the credit card account that charges the highest amount of interest. Use the calculator to find out how much faster you will pay off the balance. Youíll be so relieved to know that there is absolutely something you can do right now to begin working toward a debt-free life. You donít have to wait around for any life-changing external factor because you can change your life. You are in control.

5. Embrace a positive attitude.

There are two ways you can approach budgeting your money. You can see it as negative, as a restriction or limitation; or you can find empowerment through taking control. As excited as you may be at the prospect of living on beans to reach a debt-free life as fast as possible, you want to make sure youíre still maintaining a healthy balance between investing in your debt and investing in your future.

When setting a budget, itís important to be realistic with yourself. Your budget should reflect your priorities, and that doesnít necessarily mean scraping by each month without giving yourself any spare cash for fun. Getting out of debt is not about sacrificing your life to pay your debt. Itís about accepting your situation and building healthy financial habits centered on your values.

Stella Walker is a frugalista who has recovered from credit card debt. She loves to share tips on smart spending and wealth accumulation on creditscore.net. She welcomes your comments below!
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October 15, 2012 | Posted By: christineluken
Great tips!
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