Feed: Kevins Get Out Of Debt in 10 Steps - AggScore: 50.0

Paying off Your Bills

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Sit down with your husband/wife and gather all the bills. List all your bills in an excel file. List them in order from lowest amount owed to highest amount owed. This is the order your going to pay them off. If they are a fixed monthly bill like gas, electric, phone, etc put them in a separate excel file. Pull out your bank statements and make sure you haven’t forgotten anything. Pull a credit report to make sure these numbers match.
Figure out for the past 3 months to your best of your abilities where every penny you spent went. Figure out how much money you have made in each month. Then from there separate all your bills/debts into categories… Mortgage/rent, insurance, car payments, car insurance, electricity, gas, oil, water/sewer, phone, cable, satellite, internet, home supplies, maintenance, improvements, groceries, clothing, dry cleaning, eating out, movies, barber/salon, student loans, credit cards#1 #2 #3 etc, child care, and you get the idea. It is important to know where every penny goes each month.

Happy New Year!

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I am back from vacation and am ready to keep helping you with your financial situation. I hope everyone had a wonderful Holiday season! Let's talk about earning extra money to help you pay off your debt. Now, I am sure some of you have been affected by  the recent economic downturn and have lost your sources of income, and that is the reason for your debt. Still, others have used their credit cards unwisely to purchase big-ticket items and now realize their job does not pay enough for them to cover their rent and bills, let alone make the minimum montly payment on that new car they just bought. Two ways to make money: 1) Get a second job. I know we all hate working, but we can't spend foolishly unless we have the cash to back it up. If you want that 60 inch plasma, you must make sacrifices to get it. A part-time job (16 hours a week) at the dollarsignr7.25 (the Federal minimum wage - you could make even more!) equals out to an additional dollarsignr116/week, which equals out to an additional dollarsignr6,032 per year. So with just 2 additional hours per day (or 8 hours each weekend day), you could have over dollarsignr6,000 extra every year! Think about how you could use this extra money! 2) The second way to make additional money is to try to sell the items that got you into debt in the first place. Trade in that expensive car for something more suitable to your budget. Put your new surround sound system on Craigslist and get a couple hundred bucks for it. If you sell items that you can not afford, or no longer use, you could make a few thousand dollars real quick!

The solution is on your statement

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I found this great article posted from KOMO News in Seattle.  Check this out!

If your New Year's resolution is to get out of debt, you now have a powerful tool at your disposal: your credit card statement.

Most cardholders have probably noticed by now that their credit card statements now include a warning noting how long it will take (and how much it will cost in interest) to pay off your credit card debt if you only make minimum payments.

Next to that information you'll also find a figure that shows how much you'll have to pay each month to be debt-free in three years. And that's the key to succeeding with your 2011 resolution.

Step One: Stop adding to the balance. For any cards on which you carry a balance, put them in a safe place where you can't use them easily (a safe deposit box, for example, or in a baggie frozen in a bowl of water). If you are using a card to pay any regularly recurring bills, cancel the autopay so you won't have any new charges going on the card.

Step Two: Set it and forget it. Set up automatic bill payment so that the 3-year payoff amount is transferred from your checking account to pay your bill on the due date.

Step Three: Get help if you need it. If you are not sure you can commit to stop charging and make that three-year payment amount each month, then look on your statement for the contact information for credit counseling help or visit Credit.com. Set up a free consultation with a counseling agency. A pro will help you review your budget to see whether there are changes you can make to stick with the plan, and if not, whether a Debt Management Plan may be an option. With a DMP, the agency will put you on a three- to five-year debt payoff plan, often at reduced interest rates.

If it turns out you can't follow the three-year payment plan on your statements, and a DMP is not an option because you have too much debt and/or too little steady income, then your best bet is to make an appointment with a bankruptcy attorney for a free consultation, and possibly consider debt settlement as well.

This may sound like a simplistic approach to digging out of debt. Of course, life will intervene with surprise expenses and financial challenges. But it can really work if you're motivated, and stay that way.

Focus on how nice it will be to celebrate New Year's Day 2014 debt-free. It will be here sooner than you think.

Source: http://www.komonews.com/news/consumer/112524949.html

Today's Step

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Today's Step:

If you have money saved up (Which is a smart thing to do) but have high credit card bills, consider using some of your savings toward your credit card payments.  Don't use all of your savings as you need to have some extra money in case something goes wrong, but it would be worth putting some of it on your credit card.  Odds are your interest rate on your card is much higher then the interest rate your savings bank is giving you. So by paying the credit cards interest you are blowing money.  Again don't use all of your savings, make sure you have enough in case of a emergency! But if you can spare it from your savings use it to help yourself get out of debt!

Hope everyone has a Merry Christmas!

Step # 6

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Set up an emergency savings account. Take a small amount from each paycheck (dollarsignr25-dollarsignr50) and have it direct deposited into a savings account, preferably ING Direct, or another high interest paying account. I know the words "high interest" are a joke at this time in our world, but 1.1%APY is better than the .025%APY you receive at a brick and mortar bank. I began doing this when I was tens of thousands of dollars in debt, and it really does help! When you have the money direct-deposited out of each check, you suddenly stop even noticing that it's gone! And after a year of putting away dollarsignr25/week, you will have saved almost dollarsignr1,500 with the added interest. These funds should not be touched, unless there is an emergency. And no, needing to get your hair done to look good for when you go out on Friday night is not an emergency. This money could be used if you lost your job, your car needs significant repair, or a loved one gets sick and needs hospitalization. Think about what you would do in any of the above situations if they were to happen to you right now...most people would have no extra money laying around to take care of them. This is a very important step.

Step #5

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Today's step:

Considering Consolidating your debt.  Many credit card companies offer introductory rates as low as 4% for one year. If you really want to get out of debt in a hurry, consider transferring your largest, high interest rate balances to a card with an very low rate and pay them off as soon as you can.

Economy Today

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Who here is in debt? Well, the estimated percentage of people in the United States who are in debt as of today, is 43%! Nearly half of all Americans are carrying a significant amount of debt! The average US household carries nearly dollarsignr8,000 in credit card debt alone. What is it with people nowadays that have to have the latest gadgets and clothes, and put themselves in a hole to get them? Why can't we go back to the good old days when a single man could buy his own home and not have to get a second job to afford it? When mothers stayed home and instilled life values in their children? Can anyone else see how badly our country has fallen in the last 30 years? All you have to do is watch the news to see the slaughters and rapes and family murder/suicides. And why, suddenly over the past 30 years, has this occurred. Because humans have lost the basic values of life. And why, you may ask, did this happen? Due to the unnatural greed that has possessed this country and their citizens. Everyone wants more than they can afford, and yes, even more than they can use! We need to shrug off this debt, get out of this oppression, stop listening to the ads on the TV and radio. We need to go back to simpler times, before dollarsignr150/month was the average for cable and internet, and every single member of the home had their own phone in their pocket. Before house prices skyrocketed to hundreds of thousands of dollars - My father bought his first three family in Massachusetts in 1972 for dollarsignr17,000! What?!? Could you imagine? Cause I sure as hell can't.

Pay more then your minimum

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Here is today's step:

Pay more then your minimum payment! This is very important.  Do whatever you can to pay more then your Pay more then your minimum payment so you can pay the card off faster.  Even if you have to suffer for a few months/year you will be very thankful when they are paid off. 

If you can afford it try to pay at least double your minimum payment,  triple would be even better but is understandable if that is not possible.

More steps coming soon!

Step #4

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Here is today's step!

Take your minimum monthly payments and add them up!  It may take 10+ years to pay off one credit card!  Along with costing you just as much interest as the balance when you finally do pay them off! This is high way robbery! You must pay more then the minimum payments so you put more down on the principal so you can pay your card off faster!  When paying a card off try not to use it unless you have no other choice.  The best way to get a credit card balance down is to keep paying more then the minimum monthly payment and to stop using it.

Step #3

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Only use your credit cards for essentials!  Only purchase things you need on credit cards, ie food, clothes (clothes that are needed not just to expand your wardrobe!) For other purchases, use cash or a debit card.  Cutting your spending on your credit cards is one of the most important things you need to do to cut debt.  Work on paying your cards off not keep adding purchases to them.  Don't be like my friend and run up your charge cards / car debts, you will pay for it dearly!

What Not To Do To Yourself or Your Credit!

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I have a friend, we will call him Ryan (this may or may not be his real name, ok who am I kidding, it's definitely his real name lol). He is 22 years old, and for awhile, he had a fun life, with no real expenses or credit issues. He lived in his parent's nicely finished basement and was supplied with food and lodging for a paltry $250/month. However, Ryan has an older brother, who, under the guise of a caring sibling, tricked Ryan into moving into a two bedroom apartment with him and his wife. Jason, the brother, at first told Ryan that the agreement they were entering into was to split the rent and utilities for their $1,400/month apartment in thirds, however, he soon changed the agreement to reflect a 50/50 split (since they each only had one bedroom). MAKE SURE YOU KNOW WHAT YOU ARE GETTING INTO AND HAVE A SIGNED AGREEMENT, even if the person is related to you. Family does not always come first for some people. So Ryan's rent went from $250/month including everything to approx $800/month with rent and utilities (he also lost out on the free food supplied by his parents, but he did finally move into his own place). The problem is that Ryan was making $12.50/hour and could not afford all these additional expenses, which then made him burden his credit cards with his day-to-day expenses. Next, Ryan decided he needed a new car, so he bought a Mazda 3 without doing any comparison shopping or research. ALWAYS MAKE SURE THAT YOU CHECK THE INTERNET AND OTHER CAR LOTS FOR PRICE COMPARISONS! You will be amazed at what some dealerships charge for their vehicles. Also, never buy a vehicle the first time you look at it - this is called immediate gratification and is a car salesman's biggest weapon against the consumer. He makes you feel like this is a once in a life opportunity and insists that the car will be gone or the price will be jacked up if you do not buy now - THIS IS A LIE. Nowadays, with the over abundance of goods coming into this country, you can find any vehicle at another lot and secondly, the longer a car sits on a dealer's lot, the more desperate they become to get rid of it. So, Ryan gets into this agreement to buy his new Mazda 3 and walks away with a 20% interest rate and a montly payment of $353. Ryan has now increased his monthly expense from $250 to $1,153. Sound smart? Didn't think so.

Now the whopper of idiocy, the crown jewel of stupidness, that thankfully, as his friend, I was able to talk some sense into him and avoid. Ryan got a raise at work to $15.xx so things began to look up for him (a little anyways). But he then decided he needed another new car (two years after the purchase of the Mazda 3, the car which he would have given his right arm to have just that short time ago). He had discovered that he owed $11,000 on the Mazda and that the total value of the vehicle was at $6,000, which made him have negative equity. He also discovered that his credit score was at 520, due to late payments to credit cards and on his Mazda.  Ryan decides to purchase a 2009 Mitsubishi Galant, which will lower his monthly payments to $278 and is a nicer vehicle than his Mazda. I say, well what about what you owe on the Mazda? And he goes on to tell me that the car salesman at the Mitsubishi dealership told him the best thing to do would be to get into the Galant at the lower rate, and to stop making payments on the Mazda. I informed him that if he did not make payments on the Mazda, then they would reposses it, but he didn't care. Finally, after doing research about the repurcussions of repossession on your credit score and financial stability, I discovered some very interesting facts. The first thing is that your credit score will plummet and you will have terrible credit for 7 - 10 years. Secondly, I found out that even if you let a creditor reposses your vehicle, you are still liable for the difference in the amount that the creditor sells this vehicle for at auction. So, in Ryan's case, the creditor would probably sell the vehicle for close to the value of the vehicle ($6,000) and that Ryan would then be sued for the additional $5,000 that was still owed for the vehicle.

Armed with this information, I was able to convince Ryan not to purchase this new vehicle. I told him that the Galant was a nicer ride and was cheaper for the short term, however, once the judgement came back against him, he would have another $5,000 loan he would have to pay off, at the same time as making payments on the Galant. The moral of the story is be smart and do your research. The internet is a wonderful thing, because now you can simply type in http://www.google.com/ and you can find out anything about anything in seconds. DO YOUR RESEARCH BEFORE ANY SIGNIFICANT PURCHASES, and you may be amazed at the information and/or price differences you may find!

Step #2

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Keep Cards with low interest rates! Get rid of the others!  Call and cancel any credit cards with high interest rates!  Even tho it may take you awhile to pay it off it is better if you do not have the account open so you do not keep charging things and bringing the balance up!   Cancel them and pay them off,  just keep two/three cards with the lowest interest rates!


Later today I will have a story about my friend who almost made a very big error with his credit!!

Step #1

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Figure out how much you owe. Gather all your credit card statements and make a list that includes the interest rates, total amounts you owe and minimum monthly payments. Pay off the ones with the higher interest rate first.  This will help you save money in the long run.  If you cannot afford to pay the whole card off in one payment then put more money toward it so it will be the first paid off.  Also consider moving the balance to another credit card that has a lower interest rate.  Please come back tomorrow for step #2!

Welcome to my blog!

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Welcome to my get out of debt blog!  My name is Kevin.  I would like to welcome all my followers who followed me over to blogger.com.  The new interface is a improvement!  Every day I will give you steps to get out of debt!  I did it once and now I can show you how to do it!