…tired of debt?
…feeling like you’re just surviving?
…wanting to move over to the thriving side of life?
Perhaps in your case, this debt was not all related to unconscious overspending. There may be numerous reasons for accumulating your current debt including health issues, major unexpected house –car –family – pet emergencies or job loss.
Overall, the goal is to be debt free.
The following tips will certainly help you make a significant dent in that debt load.
1. Know Your ”Why” For Being Debt Free
Get motivated on the primary reason you are ready to take action on eliminating debt. Are you sick of the stress, feel out of integrity with yourself, want a new home, vacation or car, determined to put the children through college or just plain tired of debt?
2. Face The Facts
Identify and list ALL the debts (medical, legal, family, credit card, department stores, student loans, wedding etc) along with the interest rate, finance charges AND fees for late payments or over the limit charges (which can top $35 each time… and then have interest charged on THOSE fees!).
Here’s the hard part…
Total up the debt. Total up the finance charges and fees. Take a big breath and really take all these numbers in.
Of course this is terrifying, but like Deming’s quote “What gets measured, gets improved”. Remember that WHY? Use this energy to create a plan that will move you to improvement and a debt free life.
Call all your credit card companies and tell them about all the 6-month 0% card offers you’re getting. Since you have been a long-standing card-holder, would they offer you a much lower rate?
One woman recently had her interest rate lowered from 10.24% to 6.24% permanently. Three out of her four credit card companies were willing to lower their rates for her.
Ask: Call and ask the creditors to waive the late fee. If you are usually on top of your bills and just got behind due to some circumstances, often the creditors will work with you on waiving the fees – but you have to ASK.
Communicate: Most importantly, let all your creditors know your situation. Rather than just not paying or being late and avoiding communication, TELL them. Creditors will often work with you. They want their money.
4. Ask For What You Want
Life goes on – you still need haircuts, dental work, therapy, vet care and other services. If you have been with someone for years, explain your temporary situation of a job loss, or reduced hours and ask if they will work with you. Many will lower their rates.
One woman’s hair dresser lowered the rate 30% and the therapist went down 20%. Another woman put off going to the dentist until the dentist called and they negotiated a $5 a month payment.
Make those monthly payments religiously. If you arranged to have payments lowered to $5 – $10 a month for the various services, keep paying on a regular basis and honor your agreement. Do whatever you can to keep these payments up.
5. Return Stuff
What household, electronic, auto, clothing item have you purchased that you haven’t really worn or used in the last few months? If the tags are still on, item still in the wrapper, take it back to the store. If you don’t have the receipt, often you can still get a credit for that store.
Many stores are taking returns these days including grocery stores. If you are not using all those cans, boxes or bags of multiple products from the last few shopping trips, see if the stores will accept the returns. Then use the credit for groceries you actually need.
Remember, for many people, shopping is more of a habit than just a functional activity. Pay attention to what you are actually buying.
6. Sell Stuff
Is that extra car parked in your yard costing you license fees, insurance and maintenance costs? Is the current car a gas guzzler? Sell it and buy a more gas efficient vehicle.
Do you have a wall full of CD’s, books, DVDs computer games never being used anymore? Sell them online (eBay, Amazon, Craigslist), have a yard sale, or sell to friends.
Are you paying storage fees for stuff you really don’t need or use anymore? Sell the stuff and make money. Apply that extra money, along with the saved monthly storage fees, and pay down your debt.
7. Use Windfall Savvy
Utilize your windfalls like the upcoming tax refunds, company bonuses, birthday or holiday gifts, insurance settlements, or rebates. Apply those funds to debt payments.
Avoid the temptation to splurge with this extra money and apply all small and large windfall money to debt. This is your opportunity to change your patterns and to reduce or get out of debt.
Okay, keep out a very tiny amount for a little treat if you must.
8. Bank The Change
Dump all daily change in a jar and add a dollar. If your bank does this daily sweep with the change into savings, sign up for this.
If you quit smoking, apply the same amount of money to the jar as you used to spend while smoking. My sister-in-law came up with this and the family eventually took a trip to Disneyland on those savings. Just think how much your debt could be reduced.
If you used a coupon and saved money, or chose to not spend on the daily latte, put the savings in the jar.
Each month or two apply this extra cash to a debt. Recognize your new thinking and behaviors around saving money.
9. Do The Obvious
Stop using all credit cards. (People spend 30% more when using cards than if they used cash or debit).
Consider a “cash fast” for a few days. Start using only cash, money you actually have and can see and feel to get back in touch with your money. You’ll start to understand how the debt started to creep up in the first place.
Remember that getting into debt is a “no-brainer”. Getting out of debt takes smarts, patience, determination, discipline and willingness to change.
You can do this. Let this be the year you start to turn your money situation around
and start thriving…