Debt = Financial Cancer, Part Two
The Cure – Start moving in the right direction.
The first step to getting out of debt is to STOP BORROWING MORE MONEY! As Dave Ramsey says, “You can’t get out of a hole by digging out the bottom!” It’s time for plastic surgery – cut up those credit cards!
The second step to getting out of debt is saving $500 – $1,000 for an emergency fund. This way, when the car breaks down or the hot water heater goes out, you don’t have to charge it to a credit card. Most people can save $1,000 by having a garage sale, selling some stuff on E-Bay or Craig’s List, working some overtime, and tightening up their budget.
The third step to getting out of debt is using the Debt Snowball method to eradicate the financial cancer that is debt. The method is simple. Make a list of your debts, smallest to largest. Pay the minimum payments on all your debts, except the littlest one. Pay as much as humanly possible on the little one to knock it off your list as quickly as you can. Then take the payment you used to make on smallest debt and apply that to the next one on the list. You are always paying the same amount out on debt every month, just concentrating on the smallest one. By the time you get to the bottom of the list, you are chunking large payments on your debts and knocking them out faster than you could ever imagine.
· Preventing Relapses. The best way to prevent debt relapses is to decide once and for all that you are done with debt! Cut up those credit cards and commit to purchasing cars, furniture, and vacations with cash that you’ve saved up. Keep reading and studying up on good financial management, budgeting, and investing. If you do have a minor – or major – debt relapse, don’t give up! Return to the Debt Snowball method and get your finances back to a healthy state.
Article by Christine Luken Originally Appeared in Healthy Times Magazine, January 2013