Turbo Tax

Tuesday, May 11, 2010

I Want to Get Out of Debt - Now What?

Tuesday's Tips Button

You've had the Wake Up Call.  You realize it's time to Get Out of Debt and Take Control of your financial destiny.

Now What?

You're going to follow the following steps and you'll be on your way.

Step #1 - NO more debt

Don't use the credit cards anymore, cut them up or do something creative with them so you won't be able to be impulsive with them.  You're never going to use them again.

Next payday, get out cash for your everyday purchases, such as gas, groceries, and blow money.  Once that money is gone, you are done spending, so make sure that you are generous, you don't want to run out of food at the end of the month! 

Step #2 - Budget

You need to sit down and make a plan. Yep, it's the dreaded "B" word, a Budget!   You take your income, put it at the top of the page and spend that money on paper, BEFORE the month begins.  You are telling your money where to go, instead of getting to the end of the month and wondering where in the world it all went.

You are the boss of what gets put on the paper, but once you're done, it becomes the boss!  

Step #3 - Starter Emergency Fund

Get a Starter Emergency Fund of $1000.  Do this as fast as you can.  Have a garage sale, sell stuff on craigslist or ebay.  Whatever it takes to get that padding in the bank.  You need to have a buffer between you and life.  There will be bumps in our plans and if you really have stopped using debt as the answer, you need another solution besides a credit card or personal loan.

Step #4 - Crush that Debt!

Start the Debt Snowball.  List your debts from smallest to largest and attack the little one.   Throw every penny you have available at that debt.  Once that one's gone, attack the next one.  It doesn't matter what the interest rates are.  Math is not your problem.  Your behaviors are.  Once you see progress, your spirits will soar and you'll be even more fired up to win.  This is what will change your behaviors!

You can do this!  

Let's hear from you

Have you just begun to become debt free or are you almost done?  Or are you so happy because you've finally busted through!  I'd love to hear from you!

If you're a blogger I'd love you to link a tip for the home, family, or money management.  Please link directly to your post so others can easily find your tip.  Put a link back here in your post so others can glean from these great minds!

Steps for getting out of Debt  Work For Me. Here's another slip for the  Tip Jar.  This post is linked to 30 Minute Blog Challenge, and Tightwad Tuesday

I hope you've found this post helpful.
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busy mom said...

Well, I have everything on a excel spreadsheet. We have $1,000 ER fund money. We have planned to pay off at least 3 debts by Oct. this yr. that will save us close to $500 per month.
I will be honest, if feels like it is dragging by so slow.
Our teen is looking for a summer job to help pay his ins. I pray that he finds one, that would be a big help and I am going to show him how to use cvs to build up him a stockpile of stuff that he uses instead of us buying it. Small steps but at least it is one.
I am trying to plan a few meals for the freezer and it is hard with picky eaters. We have a garden but only 2 of eat any veg. We can share with our friends and that is going to be a blessing. One of them has a pressure canner so she may let me learn to use it. I found some grapes at the local store last night ($17 a bucket) I think this thurs. I will get it and have hb to help plant them.
We want to do alot but it takes time and I hate to say but some money to get things rolling sometimes.

Lori @ Couponomic Stimulus Package said...

busy mom, I know it does take time to get out of debt. And trying to become more self sufficient does take time and money!

Dave Ramsey has a saying that his plan for wealth is like a crock pot and if you're looking for a microwave you came to the wrong place! Because a crock pot while it takes longer, tastes soooo much better!

Isn't that true! And when we use our money rightly, it seems to take soooo long (I'm in a stretch like that right now!), but it's so worth the time when you start to see the light!

It's not easy, just worth it!

Amy said...

We are on the other side and I love it and want to encourage others to push through.
I have always been frugal and even when we became debt debt free I stuck to my frugal ways, probably because it's just a way of life for me.
I am a credit card user, but we are now switching back to cash. My only advice to tip #1 is wean yourself off. I have a CC bill coming this month, so it's hard to go back to all cash the same month. I should have it back to all cash by 2 months though.
Thanks for the encouragement.
And busy mom, you are teaching your kids valuable life skills. Love it!!

Phoebe @ Cents to Get Debt Free said...

We received the "No More Debt" wake up call at the end of 2007, when we were over $36,000 in consumer debt. By doing the same things you mentioned above, and really keeping an eye on our spending so we could fly toward our goal-we are currently under $2000 in debt! And we never changed our income, just changed our spending. As a matter of fact, we made less last year than the 2 years prior, yet we paid more off in debt than ever before. It can be a tough journey at times, but it's OH SO WORTH IT!

Lori @ Couponomic Stimulus Package said...

Amy, Congrats! It feels so good to be through doesn't it!

Phoebe, AWESOME! You care so close! You'll be there before you know it! I know it is so often the spending, NOT the income. Although, there are definitely times that income is the problem, for the majority of people, it's spending.

busy mom said...

ok, here goes. A couple of years ago I started using cpns ( not big but a start. Now I am a firm believer of them I use them alot. last yr. I save over $3800 for the yr. and spent OOP $4000 so that is close to half.
This yr I was slack in Jan and Feb but I am making up for it now.

On my bog, I have posted out debt total - it is high but $72,000 is the house w/ land. Like I posted earlier in 5-6 mos. we will have 3 more big loans paid off!!! I will take that and pay off some medical bills. MRI's are running $2500 + after ins. pays. The a couple more. I want to be able to put a double our house payment by this time next yr. if now sooner. Hubby is the one working and I will be done with my degree by spring of next yr.
I know we can do this but it by taking one bite of the elephant at a time:)
Thanks for posting this tips and giving the encouragement out to everyone! I think from time to time we need it.

I only posted out total debt on my side bar of blog.
Under it I am posting my groc.savings totals.

Stephanie - My Frugal Lifestyle said...

Thanks so much for such a great linky party! I think everyone needs some helpful tips to help them through hard times and financial problems.

Jill said...

I'm visiting today via Welcome Wednesday :)

From one Frugal Mom to another.. great informative post!!

It is an Awesome feeling of accomplishment when you see that light at the end of the tunnel.

I now Follow your Wonderful Blog :)

Jill @ Frugal Plus


Paula@One Mom's Corner of the World said...

Hi! I need to be this! I'm from Welcome Wednesday and just signed up to be a follower.

allthingsnew said...

Just came by from WW! Love the name of your blog and look forward to more good tips!


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