Discover Debt Freedom!

Ask any financial expert in the country what the biggest problem facing the people of this nation is today and they will say that it is the high level of personal debt that many of the people across the nation are carrying.  Since this century has begun, many people have been spending more than they can afford to live a lifestyle funded by home equity loans and credit cards.  Now that the days of easy and plentiful credit are gone and the values of many homes across the nation are plunging, people are beginning to see just how deep the financial hole that they were digging is and are having a great deal of trouble extracting themselves from that hole.

What Happened?

Over the last twenty years, the culture of the nation has switched from a culture of savers to a culture of spenders.  People were told that it was their national duty to go out and spend money because that is what caused the economy to grow and keep moving.  If you did not have the cash to spend, there were no worries because there was always some credit card company that was willing to give you a credit card so that you could spend more money now and could worry about paying it back at a later date.

Commercials for items became more prevalent over time, with companies trying to convince people that they had to have items that they really didn’t need and taught the children of the country that if they didn’t convince their parents to buy them the latest and greatest things, then they would become social outcasts among their peers.  Of course, the parents that would do anything for their loving children put these new expensive items on their credit cards so that their children would have the same items as all of their friends.  This resulted in many middle class children sporting $200 shoes, $150 jeans, and a new cell phone every several years.

Add this to people purchasing larger homes than they could afford without having to document their income or provide a down payment and college kids having credit limits of thousands of dollars on multiple credit cards and you can see why the nation is facing the problem that it is in today.  Now those payments on earlier purchases are coming due, people are unable to take equity out of their homes to pay off their debts, and they cannot support their current lifestyle on the money that they are making at their job.  This is driving people deeper and deeper into debt as interest payments and penalty fees continue to increase the amount that is owed.

The housing crisis has caused many problems for personal finances as well.  Houses are losing their value quickly because of the housing bubble that inflated prices beyond all reason so people that would like to purchase a home cannot afford to buy them at the current prices.  People that need to sell their homes because they cannot afford them cannot find buyers willing to pay a high enough price to cover the amount of money the owners owe on or have invested into the home so they are stuck in a home that they cannot afford.

The problem is going to become worse before it gets better, as more and more people fall victim to the forces of the economy that are against them.  Over time, the economy will stabilize and reason will return to the financial sector of the country, but not before the many excesses of the current decade have been shed and people that have spent more than they could afford either make the sacrifices that are required for them to regain their financial footing or they declare bankruptcy so that they can begin again new, but with a serious disadvantage.  The problems are not too big to surmount, but it will take time and the cooperation of the entire nation.

Are you interested in getting out of debt and stopping the monthly payments you must make to your creditors?  If so, you are in the company of about 75% of the population that has found themselves with more debt than they are comfortable with.  There are certain steps that can be taken to eliminate the debt that you have and prevent you from accumulating more, which is the only way to truly realize debt freedom.

Step 1 – Changing The Way You Think About Debt
In recent years, debt has become an acceptable way to get the things that you want quickly, instead of saving up for the items over time as our parents did and only purchasing the things that you can afford.  This has translated into the highest level of consumer debt in history and millions of people across the nation filing for bankruptcy protection from crushing debt.  In order to become debt free, you must begin to think of debt as something to be avoided at all cost and conduct your life accordingly.

Step 2 – Stop Digging The Hole That You Are In
The biggest step in eliminating your debt is to stop creating more debt.  You will never eliminate the pile of debt you have accumulated if you are adding to the total each month by purchasing more items.  If you have credit cards, put them away somewhere that they are not easily accessible and stay away from the stores where you know that you always purchase more than you intended to.

Step 3 – Make All Of Your Payments On Time
Nothing increases debt faster than penalty fees on an account and you are not receiving any benefits from the extra money that you are paying to the companies.  Penalty fees assessed against an account for paying the bill late can range from $5 for the cable bill to $39 for a credit card bill.  If you are being assessed numerous penalty fees on several different accounts each year, you could end up paying thousands of dollars extra to these companies in a very short period of time.

Step 4 – Cut Out The Convenience Fees
There are many different things that people do without thinking that could be classified as a “convenience fee”, such as the $2.50 paid for the convenience of using an ATM that is not branded to your bank or the $4 paid for the convenience of purchasing a coffee instead of brewing your own at home.  Over time, these convenience fees can add up to thousands of dollars that could have been saved by taking a few minutes out of your busy schedule to do things for yourself or to plan ahead for the things that you will need throughout your day.

Step 5 – Save Money For Emergency Expenses
One of the biggest reasons that people fall into debt and remain in debt is that they spend all of the money that they make and do not have a cushion to use in the event of an emergency.  If you have no savings when an emergency financial situation arises, you are much more likely to charge the amount to your credit card, where you will pay up to 30% interest, or you will take out a payday loan, which charges 390% interest packaged to look like a fee and can trap you in a cycle of debt that may take months to release yourself from.  By placing some money aside in a savings account, you can ensure that you will not have to use either of these options when a financial emergency arises.

There are more people in debt across the nation today than at any other time period in history, as many people have been using credit to spend beyond their means and purchase large homes that they can not afford.  Many of these people are now having trouble paying all of their bills and are growing increasingly desperate as they find themselves falling farther and farther behind.  Many of these people may be tempted to turn to a debt relief company to help them eliminate their debt, but in some cases, turning to these companies can cause more harm to your financial future.

Although there are some debt relief programs that may be able to help you reduce the amount that you owe to creditors or help you make a plan to regain your financial freedom, there are also many debt relief companies doing business that will not do anything to help you reduce the amount of money that you owe and may even drive you deeper into debt by charging excessive fees for doing little to no work on your case.  Some people are so desperate for debt relief that they ignore the warning signs that the company may be scamming them and end up getting deeper into financial trouble.

There are some things that should be kept in mind when looking for a company to help you with your debt to keep you from making the wrong decision and owing more money than you currently owe.

1.  If it sounds too good to be true, then it is probably a scam.
There are many debt relief companies that promise to settle your debt for pennies on the dollar, wipe away your debt without hurting your credit score, or repair your credit in a quick and easy manner.  None of these actions can be accomplished legally and attempting to settle your debt or repair your credit in these ways can create just as many legal problems as financial ones.  If a company is telling you that they can do this for you, avoid this company like the plague because they are lying to you.

2.  The company is charging high up front fees.
If the company is requiring you to pay high fees, often more than $500, up front before they begin to work on your financial situation, this may be another red flag that the company is more concerned about padding their bottom line than with helping you with your financial problems.  The owners of companies offering debt relief are being sent to prison in increasing numbers because they have charged their customers outrageous fees, $7,500 per customer in one case in Ohio, for debt relief help that they would not or could not perform.  Even if these scam artists get sent to prison, that does not mean that the fees that you have paid will be refunded to you, meaning that you will be deeper in debt than when you began.

There are several legal ways that can be used to reduce the amount of debt that you owe to your creditors or lower the interest rates that are being charged on your debt, but they all involve talking to the creditors and explaining your financial situation.  Many of these creditors will be willing to work with you because obtaining some of the money that is owed is better than receiving nothing because the person was forced into bankruptcy.  There are a number of different government programs that can assist a person with navigating through these financial systems and getting the assistance that they need and these government agencies will not charge you thousands of dollars for the help.

Experts estimate that nearly 40% of adults across the country are carrying significant amounts of debt and the total amount of consumer debt across the nation has climbed to record high levels.  Many people are finding themselves drowning in debt as home equity lines of credit are cut off and credit card companies begin to restrict spending and increase interest rates to shore up their own bottom line. 

Because these people were used to having credit to fall back on, many are having trouble living within their means and their debts continue to increase as they find themselves spending more than they make each month.  People that are deeply in debt will need to find some strategies for tackling the debt effectively to eliminate it from their lives.

Tactic Number 1 – Be Honest About The Amount That You Owe To Creditors
One of the worst financial mistakes that a person can make is to be in denial about their financial situation.  Ignoring the problem will not make it go away and the longer you go without attempting to remedy the situation, the worst the problem will become.  As soon as you recognize that there is a debt problem, a plan should be made for reducing that debt as quickly as possible.

Tactic Number 2 – Create A Payment Plan
To effectively reduce the amount of debt that you owe, you will need a plan for repaying that debt.  The easiest way to do this is to create a monthly budget that covers your needed expenses for the month and eliminates any unnecessary expenses.  Any money that is left over after paying for the items in your budget should be applied towards paying down your existing debt.

Tactic Number 3 – Get Caught Up On Any Bills That You’ve Let Slide
If you have been avoiding paying certain bills, it is very important that you get caught up on these bills as quickly as possible.  Paying bills late or missing payments will result in a decreased credit score, which will make it difficult for you to get credit in the future, and will also result in producing more debt because of the late payment fees associated with missing payments on these accounts.  If it is difficult for you to pay off your bills and put a significant amount of money towards paying down your credit cards, you should pay the minimum payment on your credit cards and focus on paying off any bills that are late.

Tactic Number 4 – Consolidate Your Bills, If Possible
Many credit card companies have been offering a zero percent interest rate for balance transfers that have been placed on a new credit card.  If you find that you have numerous different credit cards that are carrying a balance, it may be more cost effective to place these balances on a single credit card with a low interest rate for balance transfers so that you are only paying one bill each month.  Be sure to read the terms and conditions of the credit card carefully to ensure that you know exactly what will be expected of you if you decide to apply for the credit card.

Tactic Number 5 – Stop Creating More Debt
You will never pay down your debt if you continue to create more debt each month by charging purchases to your credit cards.  Take the credit cards out of your wallet while you are trying to pay down your debt so that you will not be tempted to use the credit cards to pay for items that you want, but you do not need.

Financial freedom is a term that is used when individuals are speaking about getting out of debt and staying out of debt.  With many individuals living beyond their means, wages receding, and inflation rising, finding financial freedom is becoming more and more difficult each year.  Here are several tips that can help an individual find financial freedom and remain debt free.

Tip #1 - Use Debit Cards Instead Of Credit Cards
Many people do not like to carry cash with them because they are afraid of being robbed, having someone steal their money when they are not looking, or losing their cash out of their pocket, purse, or wallet.  If you are one of the people that do not like carrying cash around with you, consider using a debit card.  Debit cards use the money in your bank account to pay for your purchases and you will not have to worry about interest payments or late fees on the items that you purchase. Although some find credit card options much better. It’s a personal decision.  Some of the best cash back credit cards are way better deals than debit cards.

Tip #2 – Don’t Spend More Than You Have Available
Each year, banks and credit card companies take in billions of dollars in over-limit charges and bounced check fees.  Each transaction that puts you over the limit could cost as much as $35 and many companies will process the largest purchases before the smaller ones in order to collect more fees.  Be sure to know how much money you have available and what your credit limit is before you begin to spend money to avoid numerous fees and a destroyed credit score.

Tip #3 – Avoid Buying On Impulse
One of the biggest money drains you will encounter is the impulse purchase.  Many of the items that are bought on impulse are rarely used and often sit in a closet still in the box or with the tags still attached for months or years after the purchase.  By learning how to resist the temptation of the impulse purchase, you will find that you save a great deal of money and avoid cluttering your home with unnecessary items.

Tip #4 – Compare Prices
Often, the first price you see or receive for an item is not the best price on that item.  Price comparisons can save you money on everything from groceries to insurance to club memberships and can often get you a lot more for your money.  Price comparisons are so popular that there are many websites on the internet that allows you to compare items across a number of different retailers to determine which one has the best price.

Tip #5 – Keep Track Of Your Spending
Keeping an accurate account of how much money you are spending and what items you are spending your money on will help you identify areas where money is being spent unnecessarily.  Identifying problem spending areas in your life and correcting them is one of the best ways to discover financial freedom.

The number of people that are falling into debt is increasing by an enormous amount each month and the numbers will only continue to grow as the credit crunch deepens and the economy continues to slow.  Many people that depended on credit cards and home equity loans to finance their style of living are now finding that they owe a large amount of money to numerous creditors and are unable to obtain a home equity loan to cover the costs like they may have been able to in the past.  These people are finding that they must live solely on what they are paid in each paycheck, which results in a large reduction in the amount of money that they are able to spend each month.

The only way that these people will be able to keep themselves from spiraling further into debt that they may not be able to extract themselves from is to create a strict budget and stick with it to ensure that they are not spending more money each month than they can afford.  While this may be difficult for people that were used to buying everything that they wanted with a swipe of a credit card without worrying about the consequences, the economic reality is that in the current economy, people are going to have to start living within their means.

How To Create A Budget

The first step in creating a strict budget that will help a person manage their finances is to determine how much the person actually spends each month.  For a period of at least one month (two months would be better), the person should keep track of all of their expenses and keep all of their receipts for review later.  This will give the person a much better picture of their financial needs than just sitting down and attempting to remember all of the things that they spend money on during the month and the cost of each item.

Keeping all of the receipts for items purchased during the month will also provide the person with a concrete picture of the items that they are wasting money on each month.  Many people make unnecessary purchases during the month that they may not be aware of because they were never concerned about how much money they were spending on frivolous items before.  If the person is in debt and needs to adhere to a strict budging plan, these frivolous items need to be eliminated from their lives and the money that is saved should be put toward paying down their debt.

Once the person has determined what they must spend money on each month and what can be eliminated from their lifestyle, it is time to create the monthly budget.  The goal is to have less money going out each month than you have coming in from your paycheck and any other sources of money that you get during the month and the bigger the gap is between them, the better it will be for the person’s financial future.  By detailing each expense that you must pay each month and the amount of money it will take to satisfy that expense, you will create a complete budget that accounts for all of your monthly spending.

The most important part of creating a budget is sticking to that budget in order to save your financial situation.  Training the mind to get out of the buy now – pay later mentality will be hard, especially for people that have never had to exercise financial responsibility, but it is possible to create a strict budget and stick to it until all debts have been repaid and the person has extracted themselves from the financial hole that they were in.   

Thousands of individuals across the nation are drowning in credit card debt and the interest rates for the credit cards are digging the hole deeper.  Some people are in despair, thinking that there is no way that they can ever extract themselves from the debt that they have accrued, but there is a silver lining for their cloud of doom.  By following these 5 simple tips, you can make credit card debt disappear and prevent it from returning to ruin your financial stability.

1.  Pay Off High Interest Rate Credit Cards First
People that have multiple credit cards will often have different interest rates for each credit card.  Begin by paying off the credit card with the highest interest rate because reducing the balance on that credit card will save you the most money in interest payments, which can then be applied to paying off your other credit cards.

2.  Do Not Miss Any Payments On Your Credit Cards
Many credit card companies apply a hefty fee to your account, often between $35 and $39, for every missed payment on the account, even if the payment is only a day late.  To make sure that fees are not erasing the work that you have done to pay down your credit card, be sure to make every credit card payment on time and pay at least the minimum amount due for payment.

3.  Stop Using The Credit Cards
It is impossible to pay off a credit card if you are still using it every month to pay for purchases.  Consider removing the credit cards from your wallet while you are trying to eliminate your credit card debt so that you will not be tempted to use the credit card.  Be sure to avoid closing the accounts that you have held the longest because this could have a negative impact on your credit score.

4.  Pay As Much As You Can Each Month
The more you pay towards your credit card bill each month, the faster your credit card debt will be eliminated.  Review your monthly expenses and see if there are any items that you can do without so that you can put that money towards paying down your credit card bills.  Common cost cutting methods include beginning to take your lunch to work each day instead of eating out or brewing your morning coffee at home instead of purchasing it each day from a coffee shop.

5.  Stay Motivated
Although it can be hard to have the discipline to cut your spending to pay off your credit card balances, keep in mind how much better your life will be without that huge balance hanging over your head each month.  Once you have paid off your credit card debt, you will have the processes put into place to easily save money for anything that your heart desires.

Short term savings are very important for life’s little hiccups, such as repairs to your home or medical bills for an unexpected illness, but many people are unprepared for these minor emergencies because they do not have any savings in the bank to use for these issues.  Unexpected expenses are a major cause of people falling into debt that they cannot get themselves out of or credit card bills that continue to mount each month because of the steep interest rates charged to the purchases made with the credit card.  With six simple steps and a little bit of time, you can remedy your situation and begin to build up your short term savings account.

1.  Add Up Your Monthly Expenses
Before beginning a savings program, you must first calculate how much you are spending each month on all of your normal expenses.  This should include both large expenses, such as your monthly mortgage or rent payment, and small everyday expenses, such as paying for gas to get back and forth to work.  It is important to be honest about the amount you are spending for each item in order for the calculation to be accurate.

2.  Multiply This Number By 6 
Multiplying the number reached in the previous calculation by six will give you the total amount of money needed to maintain your current lifestyle for six months.  This is the recommended amount of savings that every person should have in the bank according to many financial experts.

3.  Add Additional Funds For Unexpected Surprises And Upcoming Expenses
It is always a good idea to pad your short term savings account with a little extra just in case you’ve forgotten anything in your previous calculations.  If you know that your child will be needing braces in the next few years or that you will need to replace the water heater in your home, add the cost of these items into your short term savings calculation as well to ensure that the money will be available when it is needed.

4.  Comparison Shop For A Place To Stash Your Cash
Different banks and different banking products will often offer different interest rates for placing your money into a specific type of account.  Because your short term savings will (hopefully) remain in this account for a significant period of time, it is important to get the best return on the money being held in the account.  Shopping around for the best interest rate will help your money grow more quickly and give you an even larger cushion for unexpected life events.

5.  Begin Making Payments Into Your Short Term Savings Account
Once you have determined how much you will need to save and where the best place to put your money will be, it is time to begin an aggressive savings plan to reach your calculated savings goal.  Paying into your short term savings account should be treated like paying a monthly bill and money should go into the savings account before you begin spending money on entertainment or unnecessary luxury items.

6.  Don’t Touch The Account
The most important part of starting a savings account is actually saving it.  After your savings goal has been reached, your short term savings account should remain untouched unless there is an actual emergency, such as the loss of a job, an illness that prevents you from working, or emergency repairs that need to be completed quickly.  After all, that is what the money has been saved for.

There will come a time in many people’s lives when no matter what they do to extract themselves from debt, the debt keeps piling up and they keep falling farther and farther behind.  They may find themselves facing hopelessness and do not know what steps they could be taking to make their situation any better.  Financial disasters can strike anywhere, but knowing what steps to take when a financial disaster hits can mean the difference between saving your financial situation and losing everything that you have worked so hard for.

Do Not Be Afraid To Ask For Help

If you are facing a financial disaster, the first thing that you should do is check your pride at the door and talk to someone about your financial situation.  This could include trusted family members, financially savvy friend, or a debt counselor.  It is important to get a new prospective on the issues that you are facing because what you have tried in the past has not worked for you.

If you are having trouble paying your bills because of a legitimate emergency, such as the loss of a job or medical emergency that leaves you unable to work, it is important that you contact your creditors about your situation as soon as possible before you become too far behind in your payments.  Many creditors will be willing to work with you if you have faced a genuine emergency and will talk with you about perhaps changing your payment plan or even suspending your payments for a period of time until you can regain your financial footing.

Be Honest About Your Situation

Many people that find that they are facing a financial disaster are often in denial about their financial situation.  They lie to themselves and to others about their financial situation in order to save face or avoid facing the reality of the amount of trouble that they are in.  Avoiding the situation and pretending that the problems do not exist is the worst thing that you can do in your situation.

It is important to take a good hard look at your financial situation and start taking immediate action to resolve the situation as fast as possible.  Although it may be hard to cut your spending or give up things that you enjoy, these are actions that you may have to take to save yourself financially.  If you are facing a financial disaster, the first thing that you must do is stop compounding the damage by spending money on unnecessary items.

Solving The Problem

The steps that need to be taken to remedy your financial situation will depend on the circumstances surrounding the financial issue and how deeply you are in debt.  In some cases, professional help may be needed to assist you in extracting yourself from your financial situation, such as the help of a lawyer or a debt counselor.  These professionals are trained to help individuals extract themselves from debt and the advice that they give you will generally outline the best way to avoid financial disaster and begin repairing your finances for the future.

Many people have been conditioned over time to buy things that they do not need and to spend money that they do not have.  Shopping has become a personal quest for some individuals, almost like a hunt with the perfect pair of $200 shoes as the trophy at the end.  This mindset is one of the reasons why individuals have racked up the largest amount of personal debt in the history of the nation.

Reversing this mindset is the only way that many individuals will be able to extract themselves from the debt that they are in.  Many have found themselves unable to resist the lure of a good deal and at the end of the month they find themselves surrounded by items that they did not really need while wondering where all of their money has gone.  These people often do not realize that they are spending as much money as they do and are often too embarrassed or just unwilling to return the items to get their money back.

There are several ways that a person can use to curb this trend and take control of their finances.

1.  Track Your Spending
One of the easiest ways for a person to keep track of the money that they are spending is to track their purchases each day.  By writing down everything that you spend money on each day, from the gas you are putting in your car to the snacks that you purchase out of the office vending machine, you will be better able to see where your money is going and what purchases could be eliminated to save money. 

2.  Stop Using Your Credit Cards
Many people have no problem with pulling out their credit card to pay for unnecessary purchase because of a buy now/pay later mentality.  They place expensive items on their credit cards without considering that those items must be paid for at a later date, with the price of the item often increased by the interest charges and financing fees that are added by the credit card company.  If there is a balance on your credit card, put the card away and spend your money paying down the balance of the credit card to free yourself from debt.

3.  Choose Your Purchases Wisely
Before you purchase that $200 pair of shoes, stop to think “Do I really need these?”  Chances are that if you take the time to think about your purchases, many of the purchases that you make on a regular basis will not seem as important and will be easier to avoid.  Plus, in most cases, $60 pairs of shoes are just as attractive as the pairs that cost $200.