Becoming debt free is usually the first resolution made at the start of a new year, right after resolving to lose weight and exercise more. But even with a month or so of the New Year gone, the time is still right to make a plan to become debt free. Getting out of debt creates a positive cash flow and also gives families an emotional lift from the pressure burdensome debt places on their shoulders. Living debt free sounds good to nearly everyone, but is something that can be hard to accomplish unless a solid plan is put in place.
Four tips for getting out of debt that most people find relatively easy to implement are:
- Cut back on luxury expenses: in order to do this it is important to make a list of things that are necessary, and identify which expenses are true luxury items. Common luxuries that can be cut from a monthly budget with little fanfare include things like making a morning coffee run and swapping eating lunch out for brown bagging it over the noon hour. It might seem hard to give up a specialty coffee in favor of an at home brew at first, but when bank balances grow from making this minor adjustment, the change is hardly noticeable.
- Coming up with a budget: this might not be the easiest debt management tool to stick to, but once a budget is developed and put on paper it is more likely to be followed. And most people are surprised at where their money goes each month, seeing it in writing helps keep expenses in check.
- Cutting up credit cards: unless credit card balances are paid in full each month the balances balloon quickly. If you are not able to pay your cards off each billing cycle, stop using them and focus on getting to a zero balance. Once one card is paid off, use the money from the payment to put towards another debt. Pretty soon this snowball effect will get you out of debt.
- Starting an emergency fund: when you do need to make an emergency purchase or have an unexpected expense, it is best to do so with emergency funds; that way credit card balances do not have a chance to spiral out of control. Start your emergency fund by putting aside $10 or $20 per paycheck, after a short time you will have accumulated enough to cover a car repair without using credit or taking out a loan.
We understand that even with these tips debt is still going to happen. If you have tried to get out of debt by implementing the above, or other, methods but still find yourself in over your head, bankruptcy could be the solution you need. Call us to find out if bankruptcy is your best bet, or if you have other options that will help you keep your head above water.
For more information about bankruptcy, contact us at www.DsouzaLegalGroup.com. We will help by coming up with solutions that work for you.