5 Tips for Debt Free Living

It is frequently reported that consumer debt is at an all-time high, and many of us are looking for information to help us eliminate our debt and begin taking control of our personal finances.

If you want to live debt free, follow these 5 tips to start you on the path to debt free living:

1. Get rid of your credit cards. Really, cut them up and throw them out. We get in trouble with our credit cards because they are a convenient, but if we ever want to get out of debt we need to stop adding debt just because it is easy. If you have ever found yourself at the end of the month trying to figure out how you are going to make even minimum payments, you need to eliminate the use of your charge cards.

Do you know that if you only make a minimum payment on your monthly payment, it will take you decades to pay off your debt? Each month interest continues to accrue on the principal amount you borrowed, a $ 1,000 balance on a typical credit card can take 22 years to pay off if you only make the minimum monthly payments!

We always have a choice of whether to pay cash or to use a credit card when we make a purchase. Don't get caught in the trap of whipping out a credit card, instead using cash even for large purchases.

2. Purchase luxury items with cash. Using cash and eliminating credit card use does not stop at small items, large purchases should also be paid for with cash. Obviously it will take longer to save for larger purchases, but the alternative is to be enslaved by the lure of easy credit.

Paying cash will make you feel a lot better about your situation and will help you gain confidence. There is nothing worse than returning home from a vacation or a long weekend only to be greeted by a credit card statement.

3. The first step in getting control over your debt is creating a workable budget.
When creating a budget don't forget to include dollars allocated for debt repayment. Many people cringe at the thought of developing a budget, but creating your own personal financial plan can be as simple or elaborate as you like, ultimately it is whether or not you are disciplined or not to follow it that will determine success or failure.

Even creating a simple budget will help give you direction, rather than hampering you having a monthly budget will free you from stress of wondering if you are overspending or not. You'll know where your cash goes and you will establish a spending plan so that you can continue purchasing the most important stuff in your life.

Create a workable budget every month, a budget that is realistic and that will allow you to fit all of your important expenses into it, but enough of a stretch to push you towards financial independence. By following a budget you will begin seeing your debt decreasing and your savings increase.

4. Seek the assistance of a professional credit counselor, accountant or financial planner. The best way to be sure you're making sound financial decisions is to seek out the help of a financial professional.

There are experts that can also help you with your personal finance problems. A credit counselor can assist with debt repayment, accountants can help with tax issues, and a financial planner can be helpful when considering investments. Include one or more of these financial experts on your personal finance team to reduce stress and get your finances on track.

5. Call your credit card company and your banks and ask for a lower interest rate. Many folks assume they have no choice but to just accept the interest and finance rates available from their banks and credit card companies, but that's not always true!

Speak to the people at your financial institutions and ask them how they can help you, while it doesn't often feel like it, you are their customer after all. The worst that can happen is they say no, but perhaps you can save an additional couple of grand a year.

If your credit score is in good condition or you've made steady, progressive steps to improve it, you may well be able to get lower interest rates on your money owed.

Use these five steps to get you started and pointed in the right direction. If you find yourself in debt it will take some time to get out from under your current problems, but it can be done.

Source by Sean Lannin

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