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4 Tips for Getting Out of Debt
Nothing that’s worthwhile is easy. That’s why getting out of debt will take a lot of time and effort. But guess what? It’s completely worth it.
To help you along that journey, here are four of my suggestions for getting out of debt:
1. Make a budget. Nobody builds a house without having a plan, right? The budget is your financial plan. It tells you where your money is going. You need to do a written budget, in writing, every month before the month begins.
Don’t make it complicated. On a piece of paper, write your monthly income down and spend every dollar on paper. Everything that comes in minus everything that goes out equals zero. Stop living based on what you have in the bank and live on what you wrote in your budget instead. This is the secret weapon of the rich.
2. Build a small emergency fund. You’ll never get out of the vicious cycle of debt without a mini emergency fund. Before you start attacking the debt, protect yourself from the left hooks life throws at you with a $1,000 emergency fund. Can you do that in 30 days? If that sounds ridiculous, I challenge you to think about what could be done to pull that money together. You’ll be surprised how creative you are when you give your life direction.
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3. Use the debt snowball. List your debts from smallest to largest, regardless of interest. Pay the minimum on all the debts except the smallest. Squeeze everything you can out of your budget, and attack the smallest debt with all the extra money you can find. When you’ve paid off that one, take the money you were putting toward it and began paying the second smallest debt. Keep at it until you’re debt free!
4. Stay focused and intense. In other words, practice focused intensity! You can fall into a financial hole without realizing it, but you’re going to need a plan and determination to get out. Close your eyes and imagine how a life without payments will look. Now go out and do it!
If you’re in debt and ready to get out (and you should be ready!), then these tips will help you get moving. Focus on the goal of a debt-free life and don’t give up!