Paying off debt is the first step towards getting rid of it and finding financial freedom at last. If you are buried in debt, you’ll be glad to know that paying off debt involves three important but quite simple steps:
1. Stop adding to the problem by acquiring new debt.
2. Establish a reserve and emergency fund.
3. As you pay off each debt, use that money to pay down the next in line (debt payment snowball).
Here is more information on how to apply each step. Regardless of your situation, you can use these same techniques for paying off debt whether you have just a little or a lot of debt to pay off.
Stop Adding New Debt
This is such a simple step, but unfortunately many of us just overlook it, partly because we are unaware of how important it is, but partly because we are overwhelmed and just assume we will never get out of debt, so why even try? Take this first step today! Simply STOP using credit cards and loans for purchases-you are adding to your debt, and it will take longer to pay it all off. If you can’t buy something with the money you have, don’t charge it unless you simply have to do so.
Cut up credit cards, and don’t use financing options or loans for things-save up money over a few months to make major purchases. Don’t keep making excuses as to why you have to use a credit card for something, otherwise you will continue adding to your debt problem, and debt reduction begins by taking this first step and being disciplined enough to stick with it.
The truth is that why credit card companies and banks may want you to believe otherwise, you do NOT need credit cards.
Credit Card Myths
Credit card companies want you to fall for these myths:
Use Credit Cards as Safety Net
Credit Cards are Convenient
Credit Cards Provide Cash Back Bonuses and Other Perks
Myth – You need credit cards “just in case” as a safety net (actually, having some savings put aside is a much better idea). Using a credit card as a fallback plan should only occur if you have no other option, but you can make other options by starting to save some money and creating an emergency reserve.
Myth – You need credit cards because they are “more convenient” than cash, debit card, or checks. This is a myth-using your debit card is just as easy and keeps you accountable to what you are spending.
Myth – Cash-back “bonuses” make credit cards valuable. Actually, these never make it worth using a credit card-they don’t remove the fact that you are paying interest over time. The interest the credit card company makes is always more than the “cash back” they give you. Give yourself the cash back by not using the credit card in the first place.
Instead of falling for all the false benefits that credit cards provide, instead [...]
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