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Becoming debt free and beginning your debt free journey can be overwhelming at first, but also exciting. We followed Dave Ramsey and his baby steps during our debt free journey, but the baby steps didn’t include a lot of the backend work we had to do when it came to budgeting and tracking our spending and income.
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0:00 – Intro
1:10 – How Much Debt Do You Have?
3:11 – Figuring out Your Expenses and Income
7:23 – Developing a Budget
9:44 – Saving a Beginner Emergency Fund
11:29 – Paying Down Your Debts
13:30 – Becoming Debt Free Faster
This video explains how to become debt free as fast as possible, by first getting ahold of your finances, monthly income and expenses, creating a budget, saving a small emergency fund, and putting as much of your extra cash toward debt as possible.
Figure out EXACTLY how much you owe and who you owe it to. On a sheet of paper or excel document, make a list of all the debts you have. Car notes, student loans, credit cards, medical bills, family loans, etc. We’d recommend listing these from smallest debt to largest debt. If you have debts on investments that are putting money in your pocket every month, such as rental properties or similar, DO NOT include those. We’re just talking about consumer debts that take away your income.
Determine your income and monthly expenses.
You may already know exactly how much you get paid. If you don’t, pay attention to your paychecks this month and take note of that. You can also look through your previous 2 or 3 months of paychecks and take an average of what you get paid every month. If you’re self-employed and your income fluctuates, do the same thing. Monitor and write down your income for this month. Go back through your bookkeeping software and look at your income for the previous 12 months. What is the minimum you can rely on every month?
This may take an hour or two, but the best way to do this is to look at the last month or two of bank/credit card statements to see what you’re spending money on. Break spending into categories: rent/mortgage, groceries, utilities, going out to eat, gasoline, clothing, insurance (life, auto, property, etc.), phones, internet, etc. Add up everything into those categories and total everything out for the month. Also track your spending for this month. Everything you spend money on this month, write down under those categories. This should include all the debts you listed in Step 1. The objective here is to get an accurate idea of the money leaving your pocket every month.
Make a budget based on your income and spending. The purpose of a budget is to help you be intentional with your spending, so every dollar you spend has an assignment. It should be something that puts you back in charge of your money, rather than your money being in charge of you. Becoming debt free will be next to impossible if you don’t do this step. It’s normal to be bad at this at the beginning. It took us about 4 months to get into a groove. Great resources:
http://www.mint.com (free for budgeting)
Our budget template
Save a small emergency fund. We would recommend one to two month’s worth of expenses. Every dollar you have left over from your income, after paying your expenses, put in your emergency fund. Pay minimums on all debts until this is done.
Start paying things off. Just like saving an emergency fund, put every extra dollar you earn toward paying off debt. There are different ways of doing this:
1) The debt snowball. Pay things off from smallest balance to largest balance, and snowballing the monthly payment into the next largest debt as things are paid off.
2) Largest to smallest interest rate. This is the most mathematically correct way, but becoming debt free is much more about psychology and behavior than math.
3) Largest payment to smallest. If you have disproportionately large payments on a smaller debts, it may make sense to pay these off first, as it will free up cash flow more quickly to put toward other debts.
Speed up the process of becoming debt free. Sell things, get more work. (we’re out of room)
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How To Become Debt Free, The FASTEST Way to Pay Off Debt and Become DEBT FREE in 2021 (Step by Step Tutorial).
How To Pay Your Costs So You Can End Up Being Debt Free
More than likely they are charging their purchases. You will also require to discover the laws of what you can and can’t negotiate. Excuses are how we justify not enabling something to happen.
The FASTEST Way to Pay Off Debt and Become DEBT FREE in 2021 (Step by Step Tutorial), Enjoy most shared replays about How To Become Debt Free.
Consumer Credit Counseling Financial Obligation Consolidation – Your Escape Of Debt
Online secured debt consolidation loan is the fashion of the day. Too many bank or nationwide revolving accounts – This is the opposite of the above. Nonetheless, it depends how you have actually counted your outgoings.
I do not require to convince you that CASH is absolutely important for our life, right? All of us desire more of it and even better a lot of it. However what do we do to get it? Work, obtain, go overdraft, use charge card? It appears that it’s never ever enough.
So we understand that having unSecured Debt is not such a bad thing when compared to Secured Debt, however how do we set about reducing eliminating it. Well, the single most efficient technique is through financial obligation settlement.
You will discover a number of alternatives for secured financial obligation consolidation online. The Web can be utilized to look for the financial obligation alternatives from the convenience of your house. Nevertheless you need to dedicate time and work a bit difficult to find the best alternative.
On the other hand there are substantial advantages to being Debt Free. Being debt-free allows you to take threats in life that you simply could not take being strained by debt. It is easier to begin a brand-new profession, release your own service or take a lower paying more satisfying job if you aren’t burdened debt. When you are one paycheck from bankruptcy it is a lot easier to live by your concepts.
Consumers in basic now bring a substantial quantity of Revolving Debt on credit cards and 47% of people who do not settle the complete balance each month pay just the minimum balance, a dreadful technique for paying off your charge card and a very costly one.
It is always much better to choose for a choice that does not destroy your prominence forever. By filing bankruptcy one completely ruins their credit score however with the assistance of financial obligation relief programs ones prominence will be decreased however with the passage of time one can restore their prominence. Most notably one can end up being a financial obligation free a lot faster and in a safer way with a future for more loans and credit card usage. Whereas personal bankruptcy would destroy ones image permanently and they would never be able to take loans once again from any banks.
There is a substantial misunderstanding that credit is the only method to get the important things we need and desire out of life. People are over costs and living beyond their methods. I’m not stating that you should not desire great things, however you should not sell your soul to get them. If you permit it to be, $10,000 in credit card financial obligation might easily a 10-15 year obligation. I want you to see in your mind’s eyeborrowing $100.00 however paying back $1000.00 sounds crazy right? Well that’s why you require a financial obligation totally free solution.
Not with the method our present credit system is set up. A Debt Management Strategy may be preferable to your circumstance. So try to settle the loans which have greater rates of interest.
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