Tonight I read an
article on Newsweek magazine on tips to get out of debt. Some are cookie-cutter lines from personal finance books, while some have practical values (whether you do it or not is another day's discussion):* Pay it Down: Work overtime, take on a second job and devote that income to paying down debt. Cash in CDs, home equity loans, loans against retirement.
* Cut Spending: Cook at home more often, brown bag it at work and be creative about gifts. If you have the biggest cable package offered, cut back to a lesser plan. Same for cell phones, Internet.
* Track Your Expenses: This is the only way to have a true picture of where your money goes. Once you see where you are, it might be helpful to have a family meeting to decide how you want to spend your hard-earned dollars. A joint effort yields a greater result, so let the kids in on things. Reviewing how you spend your money allows you to set priorities and results in a freedom, putting you in charge.
* Pay Cash: This results in a significant savings, both in terms of what you purchase, but also in not paying interest on your purchases. When you're out of money, you simply stop buying!
* Around the House: Adjust the thermostat by only two degrees. Experts say you can reduce your heating and cooling bills by 5 to 10 percent by simply moving the thermostat two degrees. Also empty your car’s trunk & fill the tires. The heavier your vehicle, the harder the engine has to work to push it around town. Correct air pressure in your tires will improve your gas mileage by about 10 percent.
* Check Your Withholdings: Speak to your human resources department at work and confirm that you have the proper number of withholding allowances on your W4. If you routinely get a federal tax refund, you're shorting yourself each month. The average refund for 2005 was well over $2,000.
* Have an Insurance Check-Up: You don't want to be over- or under-insured, but if you haven't compared rates in a while, it's time to do so. Also, inquire about discounts for good driving, security systems, or putting all of your insurance with one carrier.
* Don't Impulse Shop: If you see something you want, don't buy it on the spot. Later, if you still want it and you're sure you can afford it, then go ahead.
* Have a Garage Sale: If you are paying for a storage building, go through those items and get rid of what you can. Then, do the same at home. You'll make money off of the items you don't use anyway, and you'll save the cost of storage.
* Power Pay Your Creditors: Some people find that paying off small bills one at a time gives them a sense of accomplishment. When one bill is paid in full, take the amount you were paying to that creditor and start paying the next largest bill. Keep working your way up the ladder of bills. When you get to the largest bills, you've built up a significant payment and can likely knock off that large debt quickly. Meanwhile, be sure to keep paying at least the minimum on everything.
November 2nd, 2006 at 02:36 pm 1162478169
I'd also advise deciding on a formula for yourself. Any extra money that can be applied to debt run in and grab a bit for building up the emergency fund. If you don't have some put back you'll for sure have a crisis and revert back to digging yourself into more debt. Say 80% debt, 20% EF.
For me the current formula for extra funds is 33/33/33 - 1/3 PAST Debt (Mortgage), 1/3 PRESENT a bit of the ol' funstuff so as not to feel deprived and rebel, and 1/3 to FUTURE for savings, retirement.
For someone who is trying to dig out I'd probably suggest 75% debt, 20% EF, and 5% fun. This is over and above your minimum payments that you'll be making to keep your creditscore up.
Slash expenses to the bone.
Only you can decide what will work for YOU and what works today may need to be tweaked in a month or two, and then again at a later date. It's not necessarily static.
I wish you good luck and will be watching to see how you're doing!! You can do this!!
November 2nd, 2006 at 02:45 pm 1162478757
November 2nd, 2006 at 07:30 pm 1162495811
November 2nd, 2006 at 08:29 pm 1162499369
November 3rd, 2006 at 01:46 am 1162518372
Thanks for the memories!
November 3rd, 2006 at 02:11 am 1162519881
ooh~ thanks for the info. i know what you're saying, i gotta cut back on some "fun" expenses and put that toward CC debt.
with all these holiday parties and gift giving are coming up, it's not gonna be easy!
November 3rd, 2006 at 02:13 am 1162519989
that's really good! you hit almost all the hot tips. how are you gonna thank me for this :-p
November 3rd, 2006 at 02:33 am 1162521202
awesome! considering 44% of college grads have CC debt and virtually all students have student loans, everyone wants to GOOD (that sounds a bit cheesy)!
so what does this business propose to help people get out of debt?
November 3rd, 2006 at 06:31 pm 1162578699
I am really big on education and trying new things to make the point. I love to talk with people so this seems the perfect avenue. I just don’t want to be a stock broker or a financial advisor who advise people in stock.
April 15th, 2008 at 07:04 am 1208243093
August 2nd, 2008 at 02:18 pm 1217686733