Wednesday, May 25, 2011

Taking Control of Your Finances: Part 3 Getting Out of Debt

We're talking baby steps for June - so don't expect these tips to get you out of debt in a month, or expect these to be all you need to do to get out of debt... look at these as a good start.  This is a shorty blog, so I'll try to keep it that way ;)
  1. Make room in your budget to pay down debt.  Maybe it means cutting out on eating out for awhile.  Maybe it means couponing your hiney off to cut your grocery down to bare minimum.  More inconvenient, maybe it means taking on a 2nd (or in some cases a 3rd) job for a period of time to tackle the debt head on.  Either way... make room in your budget and stick to it, monthly!
  2. Tackle your smallest debt first.  I know, doesn't make a great deal of sense.  Most people would say to tackle the debt with the greatest interest rate, but the idea is that if you pay down one to the point of paying it off, that generates the moral and motivation to keep it going.  
  3. After you've paid off the smallest, go to the next smallest, and so forth.  Dave Ramsey (our financial guru) calls this the snowball effect. 
  4. Work to not accumulate any more debt.  This sounds like a no brainer, but seriously, it's easy for debt to accumulate with not much effort.  Even if you just purchase a few things online with a credit card, it's easy for those few things to turn into a few more, to a few more, and those few things add up!  Nothing is too dramatic to save yourself the trouble.  Dave Ramsey would greet you with a pair of scissors and a trash can ;) 
Watch tomorrow for part 4 where we'll sum everything up!


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