Learn To Live Debt Free

The Financial independence equation includes several parts. One of those parts is your entire accepting of debt and how to appropriately supervise it. You will also need to be familiar with the variation between high-quality debt (a home mortgage, a business loan) and awful debt (unpaid off credit card debt, non deductible personal debt).

Once you have mastered the capability to grip debt, your anxiety level repeatedly seems to take on a whole new sense. It is very reassuring to not worry about paying your bills. So learn to be debt free! collected works calls become a thing of the past.

So how do you get to that point? The answer has already been uncovered past. It is one that you are familiar with. The covert to eliminating your debt is just getting started! You need to pick a system that you are relaxed with and stick to it.

Some experts say to pay off your buck balance first. Others say to pay off your highest interest rate first. In the end, it does not truly matter; just find something that works for you. I am going to show you a system that is very easy to apply and will clean up your debt quickly while saving you money and interest fees. Won't it be great to say, "I'm debt free!"

Let's take for granted that you have several credit cards that you are trying to pay off. You cannot seem to make any advance because you are just making the minimum payment on each card. You are not alone. The regular family carrying the average debt of $10,000.00 and making only the least amount payments on their cards will need more than 30 years to pay down that debt and this assumes not adding any new debt while paying down the old! The picture gets worse if your creditors blame more than the typical 18% or if you miss any payments along the way. Think debt free.

How Do We Get Out of This Mess?

In a word...Discipline. You get out of this mess with discipline. You have to commit to a different debt free lifestyle. You have to examine your needs versus your wants. After all, that's why you are here in the first place isn't it? You have to examine what you are charging and ask yourself “ do you really need the item”? Once you are able to control your spending better, we still need to tackle the mountain of debt we have accumulated and get rid of most of the credit cards once and for all. 

You start by putting down on paper all of your monthly credit card's outstanding balance and the respective minimum payment on each card. Divide the two to see how long it would take to payoff that card using just the minimum payment. Make a grid so it looks like this:

Card Name	Balance Due	Min Payment	Months To Pay Off
Card #1	$2000.00	$50.00	40
Card #2	$1200.00	$60.00	20
Card #3	$800.00	$35.00	23
Card #4	$3000.00	$70.00	43
Card #5	$300.00	$30.00	10

A quick glance reveals that you are spending $245.00 per month on minimum monthly payments on your cards. Now here is where it gets interesting and creative. Take the card with the quickest payoff time (in this case, card #5) and devote all your energy into paying off that card while still making the minimum payments on the other cards. Maybe you have to give up that daily trip to the local coffee shop or the ice cream store or whatever. Just do whatever it takes to add to your monthly minimum to make that balance disappear as fast as possible and then CUT UP THE CARD...(don't forget to call the lender to officially close that account).

Now with four cards left, you pick the card with the next shortest payoff time and in addition to the minimum payment, you add whatever you were paying on card #5 that no longer exists. So in this example, you will now start to concentrate on paying off card #2 with the minimum plus all the money you were using to pay off card #5. When that balance is gone, do the same for the next. So let's say you budgeted $300.00 per month to payoff the 5 minimum balances ($245.00) plus a little extra from “discipline”. 

That $300.00 per month does not change as you have less cards to pay...you are just focusing on less cards as time goes by and the cards are paid off quicker. Get it? In addition to lowering your debt, the previous activity also has a positive mental aspect because you feel good after getting a card paid off. While you are paying down this debt, you must resist all temptation to take on any more debt.

Eventually, you will get down to what I like to feel comfortable with...two cards. In addition to having less outstanding debt there is another less obvious yet very positive aspect to having less debt, that is your credit score will start to rise and any subsequent credit you may need will be afforded to you at a lower interest rate! If you could raise your credit score from say 650 to 750, you could potentially save more than $3,000.00 per year on a 30 year $300,000.00 home mortgage by getting a better interest rate. 

Living Debt Free does not have to be a far fetched dream. Anyone that puts their mind to it can achieve the inner peace and harmony that comes from living without financial worries. No one is saying it is easy to get there on your own.