John E. Pytte
Steps to Eliminate Debt | Debt Relief
Steps to Eliminate Debt
Debt relief is easier when you’ve only ever known relief from debt. Those who want to live a life that’s debt-free and enjoyable know a few tips and tricks that help them live a life that’s not financially obligated to anyone else. These are the people who know it’s better to stay out of debt by spending less than they earn, by creating a budget, and by always focusing on their finances. If it’s too late and you’re already in debt, it’s not something you have to live with forever. There are ways to avoid future debt and eliminate current debt, and there are numerous tips to help you find debt relief.
Know-How to Avoid Debt
This is one of the key factors in living a life of financial freedom. Avoiding debt is not just about forgoing the use of credit cards and refusing to finance anything. Avoiding debt is simple when you live by one simple rule. You must always spend less than you earn. You can create a budget that allows you to pay your expenses each month and still have fun while spending only $1 less than what you earn, or you can create a budget that allows you to spend $1,000 less than what you earn.
It’s up to you, but it’s how you stay debt-free. You never buy what you can’t afford, and you never finance something unless you can pay it off at the end of the month before interest accrues. The rule is you never buy what you can’t afford to pay cash for in the moment, and you never live above your means.
Understanding Good Debt
Before you panic thinking you’ll never be out of debt because of certain things, it’s important to understand what constitutes a good debt and bad debt. Credit card debt is bad, but only if you have revolving credit. You can use your credit cards each month to earn cashback and to buy whatever you want, but you can’t let it revolve. You must pay it off each month. That’s not bad debt. Not paying it off and running up a balance that revolves is bad debt.
A mortgage payment is not a bad debt. Your payments aren’t being wasted. They’re turning into the equity you will one day get back if you decide to sell your home. Car payments are bad debt because you never get your money back on a car. It loses too much equity too quickly for that. Good debt is any debt that pays off for you in the end, and bad debt is any debt you pay for.
How to Get Out of Debt
Make it your priority. Your number one goal should be to pay off your bad debts as quickly as possible. One way to do this is to take every extra dollar you have each month and pay off your debts. You can start with a small credit card. Apply as much as you can toward that payment until it’s paid off. Then take that payment and add it to the card with the next lowest balance. Do the same thing over and over again until you pay off your debts.
Debt consolidation is another option for paying off debts. You get to pay one interest rate that’s a lot slower than the many you’re currently paying. If you can’t afford that, you can try the settlement plan. It’s not always easy to get out of debt, but it does pay off in the end.
It’s not too late to get your financial life in order. You might learn the hard way, but a lesson learned is never a waste. It helps to budget, to know where your money goes, how much you have, and where you can cut corners by minimizing your bills and your debts. You do have control over your finances if you only allow yourself a chance to take control.
There are occasions when we get into debt for reasons beyond our control as well. Whatever your situation is, talk to Georgia Debt Relief for sound advice on debt, taxes, repossessions, bankruptcy or any other legal financial matters you need help with.