Get motivated to become debt free in 2011
For many people, tackling debt is a New Year’s resolution. If that’s your 2011 goal, I’d like to share some advice and help from people and tools that can help motivate you.
Larry Waschka, author of “The Complete Idiot’s Guide to Getting Rich,” was a successful Registered Investment Advisor who died at the young age of 42 in 2004. More than for his financial success, Larry is remembered for the fun he created wherever he went. Country music superstar Tim McGraw’s “Live Like You Were Dying” was appropriately played at Larry’s services.
One of Larry’s core beliefs was that people should get their financial house in order and do what it takes to get out of burdensome consumer debt. He even offered his employees financial planning seminars as a benefit to help them become debt free and stay on track. If being free of expensive and unsecured credit card debt will help you live your dreams, then start taking names and making commitments. There are places you can go on the Internet to find valuable advice similar to the expertise Larry Waschka offered to so many during his lifetime. This could be your turnaround year.
Admit it. Look at it. Add up all your debt outside of your home and auto, and put a light on it. How much is it, and how much is your consumer debt costing you in interest payments? Once you’ve decided the total amount owed, prioritize the order in which you choose to pay off credit cards in full. Hold on to cards you’ve held a long time after they’re paid in full because your credit score, a three-digit number denoting your credit worthiness, is enhanced with longer history.
Getting started also requires stopping, says one of my favorite sources, J.D. Roth, founder of GetRichSlowly.org and author or “Your Money: The Missing Manual.” One of his central philosophies is that you have to stop spending to conquer debt. J.D. has published numerous articles on ditching debt in three steps.
Curb late fees
If you have a problem with delinquent accounts, set up an automatic draft for the minimum payment for that account from your checking account. You can send in additional money as you choose. With that arrangement, all late penalties come to a halt, and your credit score begins to rebuild. Liz Pulliam Weston, whose latest book “The 10 Commandments of Money” will be published Jan. 20, provides tips and answers questions about this and other ways to simplify personal finance.
There are websites that have nifty calculators to help you figure out exactly how long it will take you to become debt free depending on how you choose to pay down your obligations.
Budgets are important so that you can see the value of paying off debt. You’ll have more monies to allocate to other saving or spending categories that bring personal joy and security, such as an emergency fund. Microsoft provides free budget templates online, and the website Mint.com offers free software for both computer and smartphone applications.
Motivational tools help, too. Mary Hunt knows all too well what it’s like to be burdened with debt. She was deep in debt and, due to her ethics and religious beliefs, refused to walk away from her responsibilities. Mary started a newsletter, which struck a chord with the public, and Mrs. Hunt was able to repay everything she owed. Her monthly Debt-Proof Living Newsletter, numerous books and DebtProofLiving.com website contain many motivational gems. Although Mary’s newsletters are not novels, she includes many pearls of wisdom and personal testimonials that are compelling and worth the investment.
It’s very important to attack your debt with a “whole family” approach. Gather all family members who are responsible for the debt or will be involved in the repayment of it. Communicating to younger children why certain things aren’t happening and what the payoff will be can help reach the goal quicker and with less fuss.
Small personal rewards, timelines, and finish celebrations are also appropriate to improve motivation. David and Debbie Briscoe, of Hot Springs, Ark., rewarded themselves with a small trip following a five-year debt repayment plan. Later, they were able to afford their dream trip, a cruise to the Greek isles, because they started saving what they had been paying toward past debt. Rewards can be decided on beforehand and looked forward to with great anticipation.
Stay the course
If debt has accumulated due to overspending on “stuff,” work to replace unproductive habits with a different activity such as walking or exercise. Make lists of things to do in your area for very low cost.
Bottom line, repaying debt must become a top priority, be personalized and realistic. If it’s broken down into weekly or monthly challenges, and family members work as a team, success can not only be realized, but enjoyed. Positive bonding can take place among family members.
If you’re completely overwhelmed and need outside help, consider contacting an organization such as Consumer Credit Counseling Services (CCCS), which can be reached by calling 800-388-2227 or DebtAdvice.org. They offer free budgeting help and low-cost repayment plans. Certified debt counselors can help you set up a repayment plan and, in most cases, they’re able to help you obtain a reduction in interest rates while you pay off credit card debt.
Richard Barrington of MoneyRates.com advocates creating an emergency fund and boosting savings as you lose your debt to allow you to seize opportunities. Savings are vital to providing financial security and opening up opportunities.
I’d appreciate hearing from you to know what works and doesn’t work for you in the coming year. Your personal story may motivate others in the future.
In that song that played at my friend Larry’s funeral, Tim McGraw sings of sky diving, rocky mountain climbing, loving deeper and speaking sweeter. When you are out from under the stress and pressure overwhelming debt can create, you are freer to do all these things. May you travel far on your road to being debt free in 2011 and follow your personal dreams.
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