Debt Free Living – 4 Simple Steps to Getting Out of Debt

Written by admin on April 29th, 2011

“The best way to break a bad habit is to drop it.”- Leo Aikman

Do you know that nearly 27,000 Bahamians’ are 90 days or more overdue on their loan payments? Believe it or not, that is the startling facts revealed in the Central Bank’s fourth quarter report for 2007.  

The report shows that 26,577 Bahamians’ are 90 days or more overdue on their consumer loan accounts with local commercial banks, representing a total of 8.065 million of consumer debt in default.  That is a 33 percent increase over the third quarter of 2007; clearly indicating that a growing number of Bahamians’ are having difficulties paying their bills because they may have overextended themselves during the Christmas.

So if you are one of those persons here are a few step you can take for getting back on track.  But I need to ask you a few questions. These are questions that you need to fully consider and honestly answer if you are really going to turn your situation around. Firstly, how did you get into debt? This question is important because it allows you to understand what brought about your situation.

Here are some of the most common causes of debt, which of these caused your situation. Was it
1. unemployment,
2. personal or family medical expenses,
3. divorce,
4. small business failure or
5. simply living beyond your means?

While a job loss and medical expense can be devastating in most instances debt usually result from overspending. So honestly answer this question as it’s a powerful start to changing you debt situation.

Once you know what cause the debt then decide to “stop borrowing!”  It is easy to think that you can burrow yourself out of debt but that not so. Consolidation loans are just a band aid approach to the real problem, and unless the underlying problem is addressed a new loan will only mask the situation for awhile resulting in a much worst situation.

Have you ever considered what borrowing actually does to your financial future?  This seemingly easy access to credit causes you to spend money you don’t have.  Not only that, it forces you to commit your future earnings to satisfy a need that may not have any long term benefits.  So stop borrowing!

Your third step is to “become committed to being debt free!” It is amazing how many persons would say that they want something but never commit to making it happen and without commitment all you will have is a wish that will never materialize. You have to commit to the process because getting out of debt will be difficult and challenging and if you are not committed you will never put in the effort needed to achieve the desired result. You will also find that once you commit then your goals will begin to move towards you in a powerful and unexplained way.

The journey toward getting out of debt begins with your commitment.  Are you committed to getting out of debt?

You may want to consider getting a financial coach. It is like having a personal financial fitness trainer.  With coaching you will get personalized attention and help with the issues that you are facing. It will help you clarifies your goals and create an integrated plan for your finances.  Having a coach will keep you focused and accountable and may be just what the doctor ordered.  “Taking Control of Your Money” financial coaching program is a good start.

Your fourth step is to “document exactly how much debt you have.” This is no time for guessing you need to be clear about this issue.  So right now list all your creditors, the total amount owed, and the required monthly payment along with the interest rate you are paying on them as well. Then rank your debts from the lowest balance to the highest balance debt; numbering them beginning with1 for the lowest amount.

Now go ahead and “make your monthly payments on time!”  This is important because you don’t want to incur any late fees or other charges which will only increase your debt. Once you are paying you debt on time now the time to start tracking your other spending for a period of thirty days. This is important because you need to see if there is any extra money that you can use to help pay down the debt.  

You will find that by tracking your expenses you will become more aware of how your money is being spent and soon able to find the extra amount to go towards your debt. If there is really no money then the exercise will help you realize that you need to increase your income.

Well there are my steps to get you started but it is only the beginning.  It is up to you to continue to take these simple steps each and every month and I promise you will get out of debt!

“It’s not that I’m so smart; it’s just that I stay with problems longer.”-Albert Einstein

Copyright © 2001 – 2009 – Glenn S. Ferguson

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