To be out of debt would be a dream come true to everyone. It can happen & will happen to all of us… some day. I’m going to be realistic here, getting out of debt is hard, it takes A LOT of effort & extreme dedication.
There is no better time then the new year to take a good look at our finances and see where we’re at and where we want to go. What bills have come and gone, what new things are going to be coming for the new year. Celebrate your financial accomplishments. If you paid for Christmas in cash that is a MAJOR accomplishment, celebrate that if it was a goal and you achieved it. If you paid off a loan last year, brag about it. I did. When I paid my truck off & got the title in the mail I was so happy I even told our UPS guy that dropped off a package. Celebrate the GOOD goals that you set & achieved in your road to getting out of debt.
Maximize your tax return in helping you get out of debt. Here are some ideas, if you are close to paying off a big credit card bill, a personal loan, a car and only need a few more dollars (whether it be in the hundreds or such) use the tax return to help. If you have a few smaller debts that you would love to get paid off, use the tax return to pay them off. Cut up the cards but don’t close out the accounts, UNLESS they have ANY annual or monthly fees tied to them, in which case you should close those.
Make a plan for the year, what is your #1 goal for getting out of debt? Why not save the tax return completely? WHAT? you ask, here is a question to ask yourself… Do you have a “Buffer” a small chunk of money set aside for those rainy days so you can go to the buffer instead of the credit card when something happens? If you don’t have at least $1000 saved up somewhere, then it might be a good idea to save part or all of your tax return for those rainy days. I had some medical issues that came up around Christmas time and having that buffer was a relief because I DID NOT want to put any of those medical bills on the credit card. So take a look at your savings when you’re looking to getting out of debt.
Another idea, when you have paid off a credit card example $500, then the next few checks, save up $500 and put it in savings, repeat the pattern. That way you’re paying off debts and saving at the same time. It will take a little longer to get out of debt, BUT you’ll be used to saving money at the same time, and that is a good pattern to start.
With any get out of debt plan, you don’t have to pay someone to get you out of debt. Why pay someone else when the process is free. Sit down, get all your bills and loans out, get them in a priority. People say “Pay the largest bill first.” I say NO to that. I call it the “Triangle.” Why start at the “biggest” loan first and work up, FLIP the triangle on its point, start with your lowest bill, pay it off completely while paying the minimums on all the other loans. Once the smallest loan is paid off, CELEBRATE! Then take the money you were using for your smallest bill (which is now gone) and pay your NOW smallest loan and work up the triangle to the largest.
Celebrate your small financial victories, they might not come as often as you’d like, but they do come. Celebrate and rejoice in the fact you’re one step closer to becoming financially FREE!