April 15, 2015 by siteinprogress
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“Debt is an ingenious substitute for the chain and whip of the slave driver. ”
Debt is equivalent to slavery because it keeps people bound. A series of day-to-day choices caused you to become indentured to your debt, but the good news is that simple steps can set you free also. It can feel overwhelming if you look at the total amount of your debt, but when you reduce it in small steps as part of an overall plan, one day you’ll look up and realize you’re debt free. It feels amazing. I charted my own escape route to financial freedom, and so can you. Here are some key steps to eliminating debt:
#1 Figure out what you owe. Many people are in denial about their debt because they don’t want to face the ugly truth before them. The first step to making a change is recognizing the problem.
#2 Get help if you need it. None of us are expected to face big challenges alone. There are financial and credit counselors whose whole mission is to help you break free from the chains of debt. Seek advice from a friend who is debt free or from an expert.
#3 Develop a budget. A runner who doesn’t know the race route will never cross the finish line. You have to set goals in order to make progress reducing your debt and also set parameters for spending to allow that to happen.
#4 Stop the madness! It’s impossible to become debt free if you continue the same bad habits. Take stock of where your unnecessary expenses are originating from and stop or reduce spending in those areas. Spend money only on what you need so you will have money down the line for what you want.
#5 Pay down bills. If you only may the interest on bills and no premiums you will remain stuck in a vicious cycle of debt. Take the money you would have spent on frivolous items and put a set amount monthly towards paying down debts.
#6 Eliminate small debt first. Huge mountains of debt can feel overwhelming. Give yourself a confidence boost by paying off small items first so you have a sense of accomplishment.
#7 Consider bankruptcy. This isn’t anything to be ashamed about. It was designed to give people a do-over if the situation became dire. Don’t abuse this measure however, and only do it if you truly have no other way out.
#8 Pay yourself first. Save a set amount from each paycheck so you build up a stash over time. If you need help, there are accounts that automatically withdraw a chosen amount from your checking account on a certain date and transfer it to savings.
#9 Reward yourself. This shouldn’t be painful. You want to stop reckless spending, but for your discipline you can still reward yourself periodically for reaching monthly goals.
#10 Pledge to be debt free! One of the first steps to knocking down a mountain of debt is to believe it can be done. Affirm it verbally, in writing and get it in your mind that you will succeed. “I want you to know people are doing this, it can be done and you are the person to do it!!!” ~ M. Tayah
For more in depth information, read Planning Your Corporate Escape Early Retirement & Financial Independence Guide and learn how to escape to financial freedom!