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10 Steps to Become Debt Free

10 Steps to Become Debt-Free

Do you have any debts? — Student loans, credit card debt, car loans, a mortgage?

Every now and then, we have to face the horrors of repaying debts.

The problem is that the situation frequently creates a vicious circle. One type of debt leads to another and by the time you realize it, you are buried to the neck in financial difficulties.

Living a debt free existence is possible, as long as you are willing to review your financial habits and to introduce some lifestyle changes.

Here is a 10-step guide that can help you get out of debt.

Determine the Absolute Essentials

Let’s face it – we live in a consumers’ world. We are all used to buying new things, upgrading the gadgets we already have and expanding our wardrobes.

Just stop and take some time to think about it.

Do you really need all of the items that you buy on a regular basis? Can you cut some spending out?

Working on a list of the absolute essentials will help you minimize expenditure, which will ultimately prevent you from accumulating more debt.

Find Less Expensive Shopping Options

Some shopping changes will be necessary when you are trying to lead a debt-free existence. It will be rather simple to decrease your monthly spending by shopping smartly and thriftily.

Getting groceries in bulk will minimize the cost. Larger packages will also prove to be less expensive.

You can plan your household needs and get on a large shopping tour once per month. This way, you will get all of the necessities and save some money.

The Credit Card

Your credit card is a great source of emergency cash but you will get into debt by abusing this opportunity.

Stop using your credit card to make payments. Instead, get new items solely when you have the cash.

Check your credit card records frequently.

This way, you will make sure that you are not losing money due to a fraud scheme. If you notice anything unusual, you should consider consulting a forensic accountant.

Stop Accumulating Debt

To deal with the debt that you already have, you should probably find ways to stop accumulating more debt.

The decision to stop using your credit card is one of the simplest ways to stop accumulating debt.

Cutting down expenditure is just as important. This is a very important step that you need to undertake in order to break out from the vicious cycle.

Draft a Repayment Plan

Now that you have stopped accumulating new debt, you are ready to come up with a repayment plan.

Structuring your installments and figuring out how much money you will need to repay your debts is going to make it easier for you to get organized and to figure out the best financial strategy.

Additionally, having a goal is also going to make it easier for you to save money.

Change Your Mindset

To save some money, you will have to get ready for a mentality change.

Stop thinking as a consumer.

Many people are compulsive shoppers. Think twice before buying something. Do you really need it? Can you go another month or two without buying such products?

Once you get into the habit of questioning your purchase desires, you will find it much easier to turn down temptations.

Start Saving!

Saving money is much easier than many people believe it to be.

Come up with a monthly savings goal. In the beginning, it should be a small portion of your income. When you get used to that, you can increase the percentage.

You can consider getting a part-time job that will assist you in the savings attempt. All of the money that you get from your second job should be placed immediately in a savings account.

You will get even more motivated to save, once you see the dollars piling up.

Find a Cheap Loan to Refinance

Refinancing current debt is usually a good idea. Some loans come with attractive interest rates that will make it much more logical for you to get that money and to terminate all of the debt you are currently dealing with.

Be very careful when going through loans and refinancing options. Compare the opportunities side by side to figure out which ones offer the best conditions.

Consulting a professional in the niche will be useful because you may have difficulties understanding all of the terms.

Select Good Budgeting Tools

Internet apps can be used effectively to simplify many everyday tasks. Budgeting tools can be something rather beneficial for you.

The right budget application can help you keep track of expenditure, make debt installments on time and save some money.

Get Your Family Involved

You will face tremendous challenges when trying to handle debt on your own. In order to be successful, you will have to get your family involved.

Make sure that all your family members understand the current situation.

Describing your financial difficulties realistically will stimulate everyone to limit expenditure and to contribute to the family’s saving account.

Try to come up with a family emergency fund that will be used solely in extraordinary circumstances.

Having to deal with debt is part of the modern existence. The number of families that lead a debt-free life is limited.

You can join this group of individuals, as long as you are willing to do some financial planning. Some baby steps in terms of changing your credit card spending and saving habits will help you go a long way.

Readers, do you have a plan in place for tackling your debts?

Photo credit: Nomad Within via photopin cc

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About Nick Anderson

Nick Anderson is a content writer at Forths Forensic Accountants and writes on different finance topics such as debt recovery, saving or investment and fraud investigations. Follow Nick on twitter.