Is there an end to personal debt?

Answer 1

stop spending.

Answer 2

Yes -- it takes work, but you CAN do it.

See, here's the thing. The minimum balance is calculated very carefully to be nothing more than the interest on your loan. So if you keep paying only the minimum, you will NEVER get rid of the debt. NEVER. So you have to pay down the balance, which means paying more than the minimum.

But don't pay more than the minimum on ALL your cards -- you want to be a sniper and take them down one at a time, that's the fastest way (though even that can take years).

The classic advice (and it worked for me) is this:

1. Write down all your debts -- every credit card, gas-company card, mortgage, car loan, you name it. For each debt write down the minimum monthly payment, the balance due, and the interest rate.

2. Pick the debt with the HIGHEST interest rate -- most likely a credit card, where the rates can top 30%.

3. Cut something out of your regular budget (go with a cheaper cable package, make one less Starbuck's run a week, whatever it takes) but pay as much as you possibly can to the debt you identified in Step 2. It's your killer, so figure out the maximum you can pay this debt while still making all your other minimum payments.

4. Make all your payments ON TIME, ALWAYS. Lots of creditors have clauses where if your payment is late, they crank up the interest rate.

5. And here's the kicker: When you have finished paying off the debt in Step 2, add the money you have been sending that debtor to the one with the next-highest interest rate.

Here's an example. Let's say you have the following debts, rates, and minimums:

Gas card: $500 debt, 29% interest, $10 minimum
Visa: $2000 debt, 23% interest, $56 minimum
MC: $1100 debt, 19% interest, $24 minimum

Total debt payments: $90 a month. (Small potatoes for lots of people, but work with me...)

Let's say you figure that you can save $15 a week by making your lunch two days a week, with store-brand lunchmeat. That's $60 a month. So you pay $70 a month to your gas card -- that's their $10 minimum plus this $60 extra. In ten months or so, you have that card down to zero.

Now, you take the $70 you have been paying to the gas card (to which you now owe nothing) and pay the Visa bill. $70 plus $56 is $126, so you pay that card down in about 16 months. Making sense yet?

Now it gets easy. You're facing an $1100 debt, but you have $126 + $24 = $150 a month to throw at it. Five more months and you're debt-free.

So now, what to do with that $150 a month? Invest it. In ten years, earning 5% compounded annually, you'll have over $26,000. Or use it to pay down your mortgage, if you have one -- any amount you pay over and above the mortgage payment must go to reducing the principal. This saves you money in the long run because you own your house sooner -- much sooner, if you keep overpaying -- and you can save tens of thousands of dollars off the end of your mortgage.

But get the high-interest debts under control first. They're the key to succeeding in other financial areas.

Answer 3

1. Live below your means. You cannot become debt-free if you spend more than you earn. It's that simple! Financial stress relief is called "money in the bank" or "positive cash flow."
2. Decide where you want to spend your money. Don't let others decide for you. Know how much money you are bringing in, how much goes out and to where it goes. If you are not satisfied with the answers you get from this exercise, now is the time to change your spending habits. You (and your significant other) are ultimately responsible for how your money is spent.
3. Pay your bills on time, every time. Managing monthly bills is an essential part of staying debt free and maintaining a good credit rating. If you find this difficult, come up with a system to ensure that bills are not paid late.
4. Set financial goals, both short- and long-term. Having goals in place makes it easier to make the necessary spending cuts to get what you really want. Without reasons to cut spending and save, you will constantly be under pressure to spend money you don't have for things you don't need.
5. Use credit only as a tool and with a plan. Figure out how and when you will pay the balance. Imagine building a house without a plan or blueprints. That's what your financial house will look like, too, without a plan. Your goal should be to pay for credit card purchases within three months. Remember, unlike wine, cheese or my wife, debts do not improve with age.
6. Have an adequate emergency savings fund. Life will throw curveballs at you, ranging from the need to replace a worn-out washing machine to a temporary job loss. Three to six months' worth of bare-bones living expenses should shield you from most of these problems. Can't do three months' worth? Start with three days' worth and watch it grow as saving becomes a habit.
7. Learn how to invest your savings. Your money has to earn more money to keep you out of debt, especially in your later years. Take a class, find a referral to a great adviser or just start reading. Do it your way, but do it; and start now!

www.eazeeclean.com

Answer 4

YES.......The answer to personal debt ending is very simple. First cut up all credit cards. Use cash money for everything except for big ticket items (i.e. house, car). Start paying your highest interest rate first and keep making minimum payments on the others. But if you have lots high interest payments to do..... consolidate all. And when you go to buy something ask yourself this question do I want this........or is this needed.

So good luck its not easy in a keep up with the JONES world like this.

Anymore question send them to

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Answer 5

I guess you dont watch Oprah. She did a series of shows on getting rid of personal debt called the "Debt Diet." It really seemed to work for a lot of people. Check it out onher site...I think there is also a book on it.

Answer 6

1) Recognize that you have a problem
2) Pay off your debts, even if you have to work 2 jobs. Once you pay them off, you're free. Start with your smallest debt and work your way up.
3) Create a budget and stick with it
4) Don't buy things the American way. You don't need to buy things you don't need with money you don't have to impress people you don't know OR like. Downsize. Get onto your feet.
5) Look into Dave Ramsey. He helped us get out of $80,000 in debt. http://www.daveramsey.com

Answer 7

Only if and when you have settled all your personal debt and stop spending after that. You could, however, try to control it somewhat by spending only on your needs and not your wants.

Answer 8

People get paid to manage your money for you.

Educate yourself, and take control of your finances. Become your own financial planner and counselor.

Answer 9

I have zero debt.

It takes discipline, but it can be done.

Answer 10

Never, there will always be something♥