The first step in Setting a Course to Be Debt Free is simple: You must decide that you want to be debt free.
The first step in weight loss is to decide you want to lose weight. Your husband or wife or mother or sister may want you to lose weight, but unless you want to lose weight, it won’t happen. Losing weight is hard work. You have to change your lifestyle. Reducing debt is the same. Your habits must change to get results. It’s hard work, so unless you want to do it, it won’t happen.
The first step to quitting smoking is to decide that you want to quit smoking. No-one else can do it for you. It’s the same with becoming debt free. You must decide that you want to be debt free.
Start now. Make a list of the reasons you want to be debt free. Here are some common reasons for wanting to eliminate debt:
- Debt is stressful. I take a cash advance from one credit card to make a payment on another card. I want to get off the debt treadmill.
- Debt is expensive. I would have a lot more money if I didn’t have to pay interest on my debt each month.
- Debt limits my financial flexibility. If I’m servicing my debt, I don’t have money to save, or to invest.
- Debt prevents me from saving for my children’s education. I want them to be able to go to college or university, but I can’t afford to save any money due to my debt.
- Debt prevents me from saving for my own retirement. I’m afraid that I will still have debt when it’s time to retire, and I’ll never be able to pay it back.
Whatever your reasons, you must decide to be debt free, or else it won’t happen. Once you have made the commitment to yourself to be debt free, it will be easier to make financial decisions.
Start by looking at your spending. Do I need to by that double espresso coffee for $4? Or should I use the money to pay down my debt? Do I need to borrow to go on a fancy vacation, or should I save money by going on a staycation? Do I need a new car, or can I survive for another year with my less expensive used car? With careful budgeting, you may be able to reduce your debt on your own and work towards the goal of becoming debt free.
Having a debt reduction strategy makes it much easier to plan your route to becoming debt free. Once you have reviewed your budget, and found ways to free up extra money to apply to reducing your debts, follow our six debt reduction strategies to help you pay off debts faster.
If you still find yourself struggling to keep up with your debt payments, then it’s usually a sign that you need to get professional debt help.