Although it may be necessary to go into debt to make major purchases, such as a car or home, I do not believe we should make debt a lifestyle. And even when we do have to borrow money, we should make it our goal to pay off those debts as quickly as possible.nnThere are three types of people when it comes to debt. The first type of person is someone who pays all their bills on time each month and thinks that debt is okay because it’s convenient and they are current on all accounts. The second type of person is struggling to pay their bills each month, living from paycheck to paycheck, and trying to cope in a constant state of frustration and anxiety. The third type of person has given up on paying their bills; they are thinking of or may have already filed bankruptcy and are allowing accounts to get further behind while the creditors are trying to track them down.nnIt doesn’t matter which one of the above scenarios represents you, this chapter is written for you. I believe that excessive debt brings a curse on your finances that prevents financial blessings from flowing freely in your life. It’s up to you to make the decision, however, that you will turn away from debt as a lifestyle. This chapter will give you concrete ideas for getting out of debt and a specific plan of action that you can implement to make it happen.nnMake Getting Out of Debt Your Top PrioritynnAlthough it is extremely easy to get into massive amounts of debt very quickly, it takes time, discipline, and commitment to get out of debt. You have to make a life-changing decision that you no longer wish to be in debt because getting out of debt is going to affect every area of your life.nThe first thing you need to do is to complete a spending inventory to find out where you are right now. A spending inventory is simply a list of everything you spend for an entire month, whether by check, charge, or cash. The purpose of this exercise is to help you locate the waste in your budget. I believe that everyone can find $100 to $200 a month in wasteful spending that can be cut. You will use this additional money in your plan to get out of debt.nnWhen you make getting out of debt your top priority, it affects your thinking, decision making, and habits. If you usually walk around the mall at lunchtime and end up compulsively buying things, then you will no longer go to the mall. Instead, you will take a brown bag lunch to work or eat in the company’s cafeteria. You will begin to analyze every purchase to decide if it is really necessary. You will cut unnecessary expenses and learn to live frugally. It’s important, as you start your plan of action, that you do not incur any new debt. Begin to only purchase things that you can pay for in cash.nnCall All Your Creditors and Contact the Credit BureausnnOne of the first things you should do when you decide to become debt-free is to obtain a copy of your credit report. By getting your credit report from each of the bureaus, you will know all the debts that you have outstanding, including any collection accounts or charge-offs that you’ve forgotten about. You can obtain one free copy of your credit report from all three bureaus, Experian, Trans Union, and Equifax, at
http://www.AnnualCreditReport.com. After reviewing your credit report and your current account statements you should contact your creditors if you are currently behind in your bills to let them know you intend to pay them off. When you call your creditors first, they will be more willing to work with you than if they have to track you down. Talk to them about how much you can reasonably afford to pay each month to see if they are willing to negotiate lower monthly payments. If a creditor does negotiate a deal with you, make sure you keep your word and send them the agreed upon amount every month, faithfully.nnIf you are current on all your accounts, especially if you have a good payment history, you should contact your creditors to ask for lower interest rates.nGet Out of Debt Plan of ActionnnIf you follow these 10 steps, you will develop your plan of action and implement it to become debt-free.nn1.Make a commitment to get out of debt, and stick with the plan. Set a deadline date for completion.n2.List all debts, including loans from family members.n3.Find an extra $100 to $200 per month in your budget using the spending inventory.n4.Put debts in order of priority to pay them off. Put them in order by highest interest rate to lowest, or by lowest balance to highest.n5.Separate debts into categories, in this order: credit cards and lines of credit, student loans, personal debts, car loans, mortgage debt.n6.Start with bill number 1 as your targeted bill. On the targeted bill you are going to pay the minimum due plus the extra $100 to $200 you located in your budget. Pay only the minimum due on all other debts.n7.Once bill number 1 is paid off, target bill number 2. Take everything you were paying on bill number 1 plus the minimum you were paying on bill number 2 and begin paying it all on bill number 2 each month.n8.Once bill number 2 is paid off, repeat step 7 with bill number 3. Continue this process until all your debts are paid.n9.Close credit card accounts as they are paid off. Keep one MasterCard or Visa account for emergency purposes only. Write a letter to close each account and to tell them not to have their telemarketers call. If you call to request the account closed, the creditor will offer you something tempting to convince you to keep it open.n10.During this process you must pay cash for all purchases and not incur any new debt.nnThe Benefits of Being Debt-FreennAfter you pay off your bills you can begin to target your money toward worthwhile financial goals, such as saving for retirement, your children’s college education, starting a business venture, or simply taking a well-deserved vacation. One of the biggest benefits of being debt-free, however, is peace of mind. You will no longer have to be stressed out about money.nn** This article is one of 101 great articles that were published in 101 Great Ways to Improve Your Life. To get complete details on “101 Great Ways to Improve Your Life”, visit
http://www.selfgrowth.com/greatways2.html.