Want to make more money? Want to be debt free? Ever dream of waking up and doing whatever you want? You can, but it’s a bit more complicated than you might think. It’s part of the American dream to have home ownership and financial freedom. But how do you get there? Don’t put yourself down for being in debt. Don’t be discouraged and tell yourself that you cant do it because you don’t make enough.
There are many ways to get to one goal. For example, if you are in new jersey and want to get to California, you can fly, walk, drive or take a really long boat trip. It all depends on what you want and are willing to do. You can do it.
Step One. How much debt do you have? What kind of debt do you have? Healthy debt is like paying off a house over 30 years. As long as you make your payments on time and the payments aren’t overwhelming, you’re fine. Bad debt, like credit card debt, can be crippling. Step one is getting out of bad debt. Paying off credit cards and collections can be a hard task. Believe me, I went from being over 10 grand in debt to about a thousand dollars in about a year.
A basic look at economics. If you are making more money than you are spending, you are profitable. If you are spending more than you are making, you are in the negative. If you are making just as much as you are spending, you are just getting by. You want to be in the profitable zone at all times. If you are in unhealthy debt, it’s time to get out of it. if you ignore it, it can be very annoying or impossible to get rid of. Collections will be posted to your credit score for years and will eventually come off. However, those agencies will continue to follow you for that money. Credit card debt will follow you as well. Personal debt, like you owe your brother 500 bucks, will never go away and can really ruin relationships. Even if that person says “don’t worry about it,” make it a priority to pay them back plus a little extra as a thank you.
Now to get out of debt. Figure out how much debt you are in. Add up all your debt and take a good look at it. Are you able to handle paying it off in a few years by yourself or is it getting out of control? Some people advise taking one big loan from a bank to pay off all the debt at once and just have a monthly payment until the loan is paid off. This could work but if your credit is in the toilet. If you have no credit history, like I did, then you probably won’t be approved. If you are like me, you probably want to figure out a way to get it all done on your own. Make a plan on when to have your debt paid off. if you owe $20,000 on whatever or to whomever, maybe being able to pay off $5,000 a year is doable for you over the next 4 years. Maybe you only owe 10 grand and want it paid off as soon as possible. Figure out a time frame and a monthly payment to stick to.
The problem is you might not be making enough right now to get out of debt or even set some money aside. This is the uncomfortable part. This is the part that no one likes, but it’s absolutely necessary. Remember basic economics. You must have more coming in than going out. You must reduce everything you are spending and even get another job to get that debt down or manageable. Again, there are many ways to achieve a goal, but how do you want to go about it? If getting a small side job for a few years to help pay off that car or whatever debt you have is fine with you, then do it. Just try to reduce your overall spending first before looking for additional income. How much do you spend a week on food? On gas? What’s your electric bill look like?
Think about what you NEED and not what you WANT.
Do you really need to pay hundreds of a dollars a month on a phone bill? I pay thirty dollars a month for my prepaid and get the same service you would with a plan. If multiple people are on your phone plan, then get a prepaid phone for each one of them as long as you are paying less than you do now. Stop spending extra money on going out or eating out. If you are going out or ordering out more than once a month, then you need to cut back. There is nothing wrong with enjoying yourself, but you have a goal and need to focus on it. I went from spending over 100 dollars a week on food down to about 45 dollars a week just by meal planning and buying everything I needed from the local grocery store. I even went so far as to stop eating as much and ate only ramen and drank tea for most of my meals on certain weeks to save money. You don’t have to be as extreme as I was, but you should cut back every little bit you can.
(To be continued)