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How to Be Debt Free from wikiHow

Mark — Wed, 12 Mar 2008 09:38:22 +0000

How to Be Debt Free

from wikiHow - The How to Manual That You Can Edit

Are you in debt? Do you want to be debt free? Do you think that being debt free is getting to be too hard for you or is impossible? Well, maybe this guide will help you.

Steps

Assess your problems. If you are in debt, figure out how much money you owe. Who do you owe it to? Is it the bank, a car dealership, or simply a friend that you lost a bet to? If it is just $0-100.00’s look for a job to work and as soon as you get your paycheck, pay-up your debts. If it is a little bit more, keep working until you have worked it all off. If you need more than a few hundred dollars, you can either work it off, go to step two, or both!
Change your behavior. If your debt is a result of overspending (for example, you buy mass quantities of everything and/or buy things that you want, but are not necessary for living), do some budget planning. Get a friend who can save and doesn’t have the spending habit. Bring him/her along when you need to purchase something. That person will be able to provide some advice to you.
Itemize your highest interest debts (generally credit cards, then car payment, then mortgage, etc.) and make minimal payments on everything but your HIGHEST INTEREST debt. Pay this off.
After debt 1 is paid off, put the payment amount that you used to get it paid off in record time into the next highest interest debt, and so on. The new extra money that you put forth into the next debts is called your accelerator margin and you continually build it. Those of you who own Transforming Debt into Wealth know exactly what I mean. You are compounding the money that you are using to pay off your debts. These two steps are IT in a nutshell…except it assumes you have some cash flow.
- most people try to live beyond their means to temporarily improve their quality of life. This only makes things infinitely more difficult in the future, and impossible to overcome in older age.
Prevent debt. Every paycheck, put aside some money for bills, food, and other needed necessities of living, and some money aside to save. Also put aside a little money for non-necessities; it is important to be able to to buy things you want without going into debt. Keep saving money, and paying off bills so that you can pay off your debt.

Tips

Do some budget planning. Plan how you will spend your paycheck
Don’t buy something just because you really want it. Buy only things you need.
Spend as little money as possible.
Take up a hobby that involves no money-spending.
Try to save gas money by walking, biking, skateboarding, etc. wherever you need to.
Avoid using credit cards! Seriously! The easiest way to avoid debt is never, never charge anything on a credit card. If you absolutely think that you need a credit card (to “help” get a good credit score) use the credit card only for purchases that you can pay off at the time you use the credit card. Pay off your credit card bill completely when it’s due. Don’t leave anything to accrue interest and definitely don’t delay for late payment charges, those are just extra expenses. This way you will earn a good credit score without taking on more debt.

Warnings

Do Not! fall into the illusion that living a more show-off life NOW in young years will improve your quality of life and friends. No one cares what you own, and if they do, they themselves are insecure. If you want to have nice things, make sure they’re for convenience and you can pay cash for them.

Things You’ll Need

Cash flow
A new way of budgeting, spending and most importantly; living

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Sources and Citations

Debt Advice - A ‘Not For Profit’ organisation able to offer free impartial debt advice

Article provided by wikiHow, a collaborative writing project to build the world’s largest, highest quality how-to manual. Please edit this article and find author credits at the original wikiHow article on How to Be Debt Free. All content on wikiHow can be shared under a Creative Commons license.

How to Start Living a Debt Free Life on wikiHow

Mark — Sat, 23 Feb 2008 02:46:02 +0000

Although debt is a part of many people’s lives, it does not have to be a ‘necessary’ one. In fact, it is quite possible to live a life that is completely debt-free. Now, just how easy or practical that is debatable, but to even aspire to that goal can free up one’s valuable time and resources to be able to do other things. After all, there’s no point in working to reduce your debt if the goal isn’t to enjoy your life more.

Here is a discussion from wikiHow discussing this very subject: living a debt-free life. Within this reader-created list, there are good tips on how to reduce debt and even if they don’t necessarily suit your specific financial scenario, these pointers are a good launch pad for you to begin fashioning your own roadmap to a life that is full and free of as much of the burden of debt as possible.

How to Start Living a Debt Free Life

from wikiHow - The How to Manual That You Can Edit
A Debt Free lifestyle is easier to attain than you think. It doesn’t matter how much money you make or how in debt you are. Once you learn how the only bills you’ll pay are utilities. No mortage, no car payments.

Steps

Stop adding to your debt. Cut up the credit cards and throw away the checks so you can’t bounce one. Do not sign up for any more credit cards or loan offers. Stay away from Pay Day Loans. Remember - If you can’t afford it today, you can’t afford it tomorrow (meaning don’t expect to pay tomorrow for debts incurred today at the gaming store).
Admit you are in debt and start living like it. Did you know that most millionaires live in modest homes and drive used cars? That’s why they are rich. Don’t expect to eat out at fine restaurants. You can’t afford it, get over it. You will be able to go someday soon but not now. Don’t buy new clothes for a while. There is nothing wrong with what you already own. Saving that money for a few months will help get you back on your feet.
Total up your debt. Go ahead and face the music. You need to open all those unopened bills. Make a list of all your debt, big and small.
Pay with cash only. While debit cards are OK to use once you get in control they can still allow you to spend more than you should but at least it’s not like a credit card.
Talk to your creditors. Don’t ignore them, they won’t ignore you. If you keep in contact with them, they will be more willing to work out a plan with you. If the first person you speak with is unwilling, then ask to speak to their supervisor and just keep going until they are willing to work with you. Be honest and pleasant, no one wants to help you if your nasty.
Make a plan for which debts to pay first. You need to pay everyone something every month even it’s it’s only a dollar, but you need to have one debt that you are going to get rid of first. Target the one(s) with the highest interest rate. Which reminds me … Call them and ask them to reduce your interest rate - many times they will do this, just because you asked!
Roll over the savings. Once you have one debt paid, apply that money to the next debt you are trying to pay off and just keep going.
Get frugal. So you don’t like cutting coupons? Too bad. If you could save $10 on your shopping next trip why wouldn’t you? Buy a cheaper brand of toothpaste. Use half the toothpaste you currently do - the size of a pea is all you need. And think about it, that $4.00 tube is now really only $2.00 … because you are making it go twice as far! it’s the little things … lots of little things add up. And even though it may be kind of “nerdy,” it is actually fun to think of all the little ways you can save money. Food shopping, buy whats on sale and learn to live with it. You’ll save and not starve. Go to matinees instead of the nighttime movies. Make your own lattes instead of Starbucks. Think to yourself what it is you really like … and then think of a way you can do it cheaper! Homemade chili is so much tastier than canned. And you can add all the things you love … Beer? Cilantro? Jalapenos? Cheddar cheese? Just the way you like it! Drink alot of bottled water? Refill them at home. The savings will rake up. Take your lunch to work, eating at the fast foods and deli’s cost alot of money.
Be conservative with your utilities. Lower your thermostat in the winter. Spend the evening at the library instead of heating up your place. And read their magazines and drop your subscriptions. Fix leaking faucets, turn off unused lights, etc.
Change your way of thinking. Instead of saying that something only cost a dollar think of it as keeping that dollar instead. That dollar will grow interest for you. So that item doesn’t really just cost a dollar it costs you your future!
Learn how to invest … not just save … but invest. Think of every dollar your money is not earning as future money just dribbling out of your pocket. Look up an investment class at your local university. Or check Craig’s List. You will find something if you really want to. (Talk to a teacher or a librarian if nothing else is working.) Then make your money work for you! Yes it takes time. But you can either have $100,000 (and easily more!) when you are 40, or not! Just check out those compound interest tables. You cannot believe how easy it is if you just get started now. If you are young, you have time on your side … and time is one of the major factors with compound interest. If you have a 401K at work, put in 1% if you can, just to start it. You really wont miss the money, but you know in the back of your mind that you have something good going for yourself.
Save for a rainy day. Old cliche I know, but it’s true. Try to put away 10% of what you make into savings. If you can’t do that then put away whatever you can. Even if it’s .50 cents. Make this your first bill that you pay. Because you are the most important thing you need to take care of. Then learn how to make your money work for you (tip: The stock market is the fastest and surest way to make the most money - over 10% over the long haul - no kidding - look it up!
Gas prices are high. Combine your errands togather. Don’t go out for just one errand, do them all at once, Get gas, stop at the post office, drug store and grocery shopping. Try to combine some of those before and after driving to work. You’ll save more each month than you think.
Get rid of the stress. Being in debt is not normal or healthy. Take some time out for you to just relax. You will be better able to handle the debt when you are rested. Check out a library book or two - something light or humorous. Make popcorn (cheap) and have a wonderful, carefree evening.
Don’t ever think that your alone in this. So many people are trying to get back on their feet. Yes it’s hard to give up alot of the things that in the past have made you happy. Doing all the things above, as hard as it is, will help you in the long run.

Tips

Think before you buy anything. Do you really need it? If not put it back.
Be strict with yourself.
Be strict with children, the I Want’s have to go away even if it means crying through the whole store (I’ve done it)

Warnings

Reducing your debt can be addicting. Remember to reward yourself once in awhile. You deserve it.

Related wikiHows

Article provided by wikiHow, a collaborative writing project to build the world’s largest, highest quality how-to manual. Please edit this article and find author credits at the original wikiHow article on How to Start Living a Debt Free Life. All content on wikiHow can be shared under a Creative Commons license.

How to Deal With Debt Collectors on wikiHow

Mark — Sat, 16 Feb 2008 20:53:47 +0000

How to Deal With Debt Collectors

from wikiHow - The How to Manual That You Can Edit

How to deal with those pesky Debt Collectors.
What do they want? What do you want? How to find a common solution.

Steps

When a Debt Collector calls, make sure to speak in an even tone.
Ask for identifying information: such as a return callback number, the collectors name, and information about the debt itself.
Remember, if you owe the debt, do not try to wiggle your way out of it.
If you cannot pay the balance in full, tell the collector that right away, this will save any headaches on your part, as well as the collectors part.
Know how much you can afford in any repayment scheme, and keep to it.

Tips

There is no easy way out of a debt, regardless of the fly by night operations which you will encounter promising ways to get out of your obligation to pay a legally incurred debt.
Remember, a professional debt collector knows more about you than you think, it’s called skip tracing, and it works!
Do not fall victim to the idea that shouting, or abusing a debt collector will get them to go away.
The laws are clearly on the side of the consumer, but an intelligent debt collector will find a way to make you pay, either voluntarily, or through civil judgment, and garnishment, and/or property liens.
The debt collector is not there to insult you, or abuse you, so don’t do it to them.
If you feel like you have been mistreated there are remedies available to you, contact the manager of the collection agency. If that fails to get the result you want, contact your local bar association for an FDCPA attorney to aid you.

Warnings

Do not buy into the “Get out of paying your debts” schemes that are prevalent on the internet, they do not work, and could hurt you financially.
The ONLY approved ways out of debt are to pay, or to file bankruptcy if you qualify.

Things You’ll Need

Have pen and paper ready at least near your phone and your door. You want to have everything in writing.

Related wikiHows

Article provided by wikiHow, a collaborative writing project to build the world’s largest, highest quality how-to manual. Please edit this article and find author credits at the original wikiHow article on How to Deal With Debt Collectors. All content on wikiHow can be shared under a Creative Commons license.