Getting debt freeby L. R. WilsonPresentation Transcript
GETTING DEBT FREE
7 Steps to Financial Freedom
by L. R. Wilson Photo courtesy of http://www.sxc.hu/
Step 1. ASSESS YOUR FINANCIAL IQ Careoncredit.com offers quizzes so that you will know your financial IQ. NBCs Today Show money expert, Jean Chatzy says that knowing the psychology of how you rate financially will give you some insight into your financial kryptonite and potential. It will also help you to map out a permanent course for financial freedom. Photos courtesy of http://www.sxc.hu/
Step 2. RECORD YOUR DEBT Write it down or type it in! Use your Droid, iPhone, or Blackberry to record the exact amount of debt that you owe. You may want to create a Debt Chart to get you started. Money guru Suze Orman’s Debt Eliminator could get you started. In addition to Jean Chatzky, financial experts David Bach and Glinda Bridgforth agree that taking debt inventory is essential before downing your debt. If these two tools are not a good fit for you visit Debt in Focus , a website sponsored by UMASS Five College Credit Union to help you begin the process of reigning in your debt. After all, how will you know how much to pay if you don’t know how much you owe? Photos courtesy of http://www.sxc.hu/
Step 3. RECORD YOUR EARNINGS & SPENDING
Ask yourself two key questions:
How much money do you make?
How much money do you spend?
Tracking your spending leaves a clear trail of where your money is going. David Bach’s Latte Factor ® will help you to determine where your money is going. Your consumption of Starbucks, Dunkin Donuts, shopping sprees and here-and-there purchases add up!
Photo courtesy of http://www.sxc.hu/ Photo courtesy of http://www.sxc.hu/
Step 4. CREATE A BUDGET Budgeting 101 :There are tools such as Quicken ® or Bundle to help you to do this with ease. Remember that the key to successful budgeting is sticking to it. Photo courtesy of http://www.sxc.hu/
Step 5. SET A DATE DETERMINE YOUR TOLERANCE FACTOR for…. “ How quickly do I want to get out of debt?” Your answer should help you to answer these questions: Am I able to pa more than the minimum monthly payments and reach my debt free goal date with my currenyt income? If so, great do it! If not, are you willing to sell heirlooms and prize possessions to reach your debt free date? If not, think about ways to earn extra income such as selling unwanted items on eBay or Amazon . Remember to honestly ask the answer to this question: How realistic is this goal for me? Photo courtesy of http://www.sxc.hu/
Step 6. PAY DOWN YOUR BILLS Pay off your highest interest rate bills first and cut up your credit cards if you cannot stop needless spending. Payment efficiency is key. Paying off the high interest credit cards first will leave more money for the bills with the lesser rates . Also, more of your money will go toward the principal balance. Photo courtesy of http://www.sxc.hu/ Photo courtesy of http://www.sxc.hu/
Step 7. CONTINUING YOUR MONEY EDUCATION As you begin to get out of debt learn how to make your money work for you. Read sources such as Smart Money , CNN Money and the Wall Street Journal to stay informed and remember not to travel down the bad debt road again! Photos courtesy of http://www.sxc.hu/