Be Debt-free by the End of 2015
Published on May 18th, 2015 | by Joan Makai
After the catastrophic financial crisis of 2008 and the never ending conflicts the following year, statistics shows that consumers in the country today are dangerously in debt. The total amount, according to the US Federal Reserve, is $2.4 trillion. That is equivalent to $7,800 debt per individual.
It’s scary to have seen the figures, especially for those who are earning a meager income and have no idea how on earth did they come up with this huge debt. Some may have less that amount. Others may have more. But the more pressing issue now is how you could get rid of that amount or any debt by 2015.
Below we compiled few suggestions to help you become debt-free by the end of 2015.
- Compute Your Debts
The first step here is to know who you owe and how much you owe those people. Include monthly utility bills (phone, electricity, water, etc.), the mortgage to your house, your college loan and the car you just bought.
So many people don’t really do this, fearing that they’ll come up with a staggering amount. But it’s better to know what (or in this case, how much) you’re dealing with so you can start working on paying it off than hiding from the actual figure and delaying the inevitable.
- Make a Payment Plan
Write down all your debts and see which needs to be prioritized. Some financial experts recommend going for the one with the highest interest rate (aka laddering). Others say it’s best to pay off the small ones (aka reverse laddering).
Reviewing your finances would help you figure out which of those debts you need to get rid of first. In fact, it doesn’t really matter which method you choose as long as you start paying.
- Pay with Cash
Did you know that the average individual in the USA carries four credit cards? You might look at your wallet and go: so what? Well, that is primarily why you are neck-deep in debt. If you want to start getting rid of your debt, stop using money which you don’t have (and that’s practically what those are for) and pay with cash you do have.
- Stop Spending Too Much
There are needs. Then there are wants. Your parents explained it to you when you were a kid. Your teachers followed up on that basic learning. Now start living it. Make a list of all the things you need and the things you think you need. Review everything and cross those you can afford to live without for a few days or even a few months – those are just wants.
If you looked at your finances and saw that you’re spending every single penny on something you and your family needed, then maybe it’s time for you to get a second job or a part-time business to help you with your finances.
Many people would find setting a goal scary and difficult especially when it involves their finances. But in an economy as unstable as the one we’re living now, It’s important to have a back-up plan on how you can take yourself out of those debts. Working on your priorities and living a more frugal life can make a difference and lead towards a debt-free life.