Once you have started the process of changing your debt mindset
to be against taking on consumer debt, then that is something
you need to continue until it becomes the norm in your life. In
some ways it is like stopping smoking; trying on will power
alone is not enough, you need to get to the source of your
problem and permanently change it. That is why self hypnosis
can be successful with stopping smoking; it reaches the
subconscious mind and re-educates it. With debt elimination, it
is the same; to succeed permanently you need to have changed the
way your mind works, not just consciously, but sub consciously
too.
In parallel to changing your mindset, you need to plan your
debt elimination strategy. This will depend on you precise
financial situation: your level of debt, monthly income,
monthly commitments, overdue debts and so on. So, I cannot make
specific suggestions for your circumstances, just give a few
pointers to what you can do to head down the road to debt
elimination. You may well get some benefit from debt counseling
or financial planning advice at this stage, but that depends on
you.
Your chances of achieving debt elimination within, say, 5
years, will depend a great deal on your own efforts, so if you
can get through this part alone, then that may strengthen your
chances of success.
Budgeting For Debt Elimination
You need to take a long hard look at your present financial
situation and how it is likely to evolve into the future. For
debt elimination to succeed, you need to be in control of your
finances and keep your finger on the pulse all the time.
The starting point should be a list of your monthly outgoings.
If you are unsure of any item, then monitor it for a month to
see. For example, you may not know exactly how much you spend
on food and other items from the grocery stores each month.
Just keep a record of them for a month to see what your monthly
expenditure is, but in the meantime use your best estimate.
You can then compare your monthly outgoings with your net
income, and this will be the basis of your budget as you
develop a plan for debt elimination. You also need to compile a
list of your debts; how much is outstanding, what the monthly
payments are, and what the interest rate is.
As an example, let us say you have a net monthly income of
$2500, and your total outgoings, including debt and credit card
repayments, are $2300. This means you have $200 to spare. With
your new, anti debt mindset, you want to use that $200 spare to
get your most expensive debts cleared first. There is a good
chance it is the credit cards that are most expensive, so you
can target the most expensive credit card ie the one with the
highest interest. You owe $600 on that card, so in 3 months you
can clear it. When cleared, you can move on to the next most
expensive.
Depending on your debt level this could be a long process;
that's why you need to plan it out and see how you will cut
down that outstanding debt level over the coming months and
years. So long as the total debt level is reducing, you are
heading in the right direction.
Also, take a close look at those monthly outgoings. Are you
sure there's nothing that can be cut out or reduced? Of course
there is, unless you've already gone through that process
recently. Be ruthless with this new mindset of yours; it really
is worthwhile, knowing there will come a day when you don't have
to worry about the odd few dollars here and there. Highlight
those budget items that are unavoidable, and make sure you pay
those first every month, or at least have the money earmarked.
If you rank your debts in order of interest rate cost, and go
for the highest first, you can work through them one by one.
Need a morale boost to get you off to a good start? Then choose
the loan with the least outstanding, and clear that first. It
may not be the best financially, but if it gives you that quick
satisfaction, so the sacrifice may be worth it.
Debt elimination is not going to be an overnight happening. You
need to be prepared to plan for a few years. 5 years is always a
good period to plan for in business, and can be too in your
personal life and finances. You may be amazed at the
transformations you can achieve in 5 years. But above all, you
need to maintain that anti debt mindset. After all, that is
what will bring you to the debt elimination pinnacle.
In the next article, we consider what to do if there is really
no spare in your monthly budget.
About The Author: Roy Thomsitt is the owner and part author of
http://www.eliminate-credit-card-debt-now.com
end article.
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