What Is Debt…
Beginners Guide To Get Out Of Debt
This might seem simple, but debt is an advance of money lent by another party. It is typically used to start businesses or as am emergency influx of cash during hard times. Once you take on debt, you are generally required to pay interest on the principle.
So say if you borrowed $500 from me, I might require you to pay back the $500 + $50 dollars in interest for my service.
Lately our society has been brainwashed to the idea that debt is good and it is now expected. We have debts for all kinds of things:
- Student Loans
- Auto Loans
- Personal Loans
- Short Term Loans
- Business Loans
Unless it’s an emergency debt is usually not a financially smart move unless you’re looking to build an asset. It can easily trap the debtee in a vicious cycle that is hard to escape.
Editor’s Resource: Top Debt Relief Programs
Beginning Steps to get out of debt
Step #1) Track Your Spending
You need to figure out where your money is going. Set up basic categories like:
- Debt Payments
Keep it simple – don’t make a hundred categories it’s harder to look at.
Be diligent, track everything! I go over this in more detail in my budgeting class but track every penny for 30 days. This way you can see where your money is going and how to”trim the belt” and put more to your debts. You will also see just how much your debts are eating at your paycheck!
After you have your spending tracked you can see how much – if any – left over money you have and put it all into debts. Every dollar you put towards debt give you a guaranteed return of investment equal to your interest rate.
So if I put $1 toward a credit card with an interest rate of 14.99%APR I effectively gained 14.99% in return on that dollar!
SNOWBALL! This is my favorite method to paying off debt fast, I used it to get debt free myself.
View my post here for a more detailed explanation. But it’s a very simple – yet powerful concept.
- Pay off the lowest balance debt first
- Make the minimums on all other debts
- Apply the previous debts minimum to the next debt
- Keep adding the minimums until you have them all paid off!
Say I have 4 debts i’m paying on.
- $500 credit card – Minimum payment $10
- $3,000 personal loan – Minimum payment $90
- $27,000 student loan – Minimum payment $140
- $109,000 mortgage – Minimum payment $620
- Pay off credit card, frees up the $10 payment.
- Apply the $10 to the payment on the personal loan – $100
- After that’s paid off you apply the $100 to the student loan – Total loan repayment now is $240/mo
- After that’s paid off you apply the $190 to the mortgage to bring the total repayment to $860/mo!
I’m sure you can see how quickly you will get rid of all that debt using this method, but don’t forget how much it will save you! In this example you’d save tens of thousands of dollars and get debt free years earlier!
Step #4 Continue to Grow
As with anything in life it’s very important to always keep learning. This Beginners Guide To Get Out of Debt has some awesome basic information but just this alone isn’t the end all be all. There are a lot of places find resources, this blog is a good place to start, it’s geared to helping average people become debt free.
This Beginners Guide To Get Out of Debt wouldn’t be complete if I didn’t also include what might be very obvious, but harder than it seems.Always, and I mean ALWAYS look for more ways to make more money. The benefits are huge, especially once you get out of debt your income can explode when you do the right thigs with all that extra money.
Warning – Do Not Do This!
- Once you pay off a small debt the worst thing to do is to take out more debt. Each time you take out a line of credit you “enslave” more of your time to a debt servitude. Get out and stay out!
What If You Need Serious Help Now?
Because this is a Beginners Guide To Get Out of Debt there is a good chance that you’ll need more than budgeting or the snowball method to get out?
The above is an awesome way to pay back debt and everyone needs to master it, but what if you’re like the millions who can’t afford to pay all their bills on time and have no discretionary income? I can relate because I was in this position too, I went off to college and started racking up debt because that’s what everyone told me to do…There are a lot of really incredible resources out there that have really advanced techniques to getting out of debt, ranging from simple “hacks” to crazy loopholes on which you can turn the tables on your creditors!
What Lies In Your Debt is a debt resource geared to legally eliminating your debt and learning how to turn the tables on debt collectors
There is a lot of good information out there,
On the other hand, National Debt Relief is a highly accredited company that specializes in consolidating an unmanageable amount of debt into a low monthly payment
Those aren’t the only companies helping people solve their debt problems, but they are definitely the leaders in the industry with lots of experience.
How Do You Find A Good Resource?
Lets be honest, there are a lot of charletons out there that have crap products. Some are just straight up scams, you definitely need to be careful! Luckily for you, I have gone through numerous programs and have weeded out the rejects and kept the winners.
Getting out of debt on your own can be a real challenge. I would recommend reading resources like this for ways to help pay off debt now and learn how to avoid a occurrence of it in the future. However since there there are so many different scenarios and people to deal with. I would recommend either hiring an expert to fix it professionally, or enrolling in a top resource that has a system to deal with debt. It will save you a lot of time and money, there is a service that I encourage you to look into because it has an incredible system for beginners to learn how to eliminate debt – and keep creditors in check. Click Here.