July 12, 2013

Do you Hope to be Debt Free One Day?

Source: If you aspire to be debt free one day, you can benefit from the information and advice provided by “debtfreeoneday” via her blog, as well as the following interview.

Overcoming debt, no matter how big or small, is a challenge for most people. When it comes down to it, you have two options:

  • Devise a strategy for paying down your debt, month after month, until you are free and clear
  • Live with your debt, without paying attention, and hope things work out in the end (not the best idea)

How to Overcome Debt

Credit cards. Mortgage. Car loan. Personal loan. Student loans. Do you find yourself dealing with one or more of these types of debt? If so, you are in the same boat as many others.

Although there is both “good” and “bad” debt, owing any amount of money can begin to wear on you over time.

Since everybody is in a unique financial position, the way you overcome debt is not going to be the same as the next person. However, there are basic steps you can take to at the very least put yourself on the right track:

  • Know how much and which types of debt you are dealing with
  • Come up with a strategy for never missing a monthly payment, and if possible paying more than the minimum
  • Track your progress
  • Hold yourself accountable
  • Never give up

Is there more to overcoming debt than this? Most definitely. You can use these five steps as a basic outline for putting yourself on the right path to a debt free future.

You can be Debt Free

We reached out to user debtfreeoneday on Twitter because her handle was quite catchy. After all, there are millions of people who strive to be debt free. As we dug deeper, we found out she had plenty of top notch advice to share with others.

Here are our questions, complete with some of the most detailed answers we have received regarding paying down debt:

1. Do you find it helpful to track your progress associated with paying down debt? 

Absolutely. My husband and I have been in debt for many years and until January of this year, we didn’t track our progress – it was all too easy to forget about the debt again and spend on the credit cards here and there. Since January, we have been making a concerted effort to pay back debts and tracking progress has been vital in terms of spurring us on to continue. We use a spreadsheet with a few formulas to automatically work out our debt total each month. There’s nothing quite like seeing those numbers coming down. We can breathe a little bit easier each time those numbers decrease. We also list all our spend each month so we know exactly how much money we have in the bank. (Or not as the case often is!)

2. What would you tell somebody who is swimming in debt and scared to take the first step towards making things better? 

As frightening as it will be, you need to tell someone as soon as possible – a friend or family member may be easier but basically someone whom you trust as you will need some emotional support for the road ahead. Don’t worry about being judged, there are more people out there in debt than you think! The first practical thing to do is contact your creditors or find all your debt statements and write down exactly how much you owe along with minimum payments for each. Ask someone to do this with you if you can’t face doing it on your own. Then list all your earnings and outgoings to see if they balance, if you have any cash to spare or if you are getting into more debt each month. Either way, in order to face debt, you need to know your exact financial situation. Once you know the extent of this, although things may look bad and you may feel even more scared, this is actually the starting point to turn your situation around. There is always advice available from debt management charities / agencies and some may liaise with your creditors on your behalf to work out payments you can afford.

3. What is the biggest challenge you have faced so far regarding eliminating your debt? 

It can be hard to stay positive at times about getting the debt paid off. After being in debt for so long, we’ve finally realized that paying off our debts is a major priority for us and buying little luxuries, going on holidays and going out socializing are things that we need to put on hold. This realization was a long time coming! For years, we pretended to be like everyone else, spending money here and there when the reality was that we were just getting into more debt. We have to scrimp and save every penny and try to earn extra cash where we can to pay off our debts to make sure that our numbers are going the right way. So keeping positive about living our lives frugally is a challenge, but we are trying to make sure that we don’t miss out on fun things – we just aim to do them with as little cash spent as possible! We’ve also found lots of support out there from personal finance bloggers and people on debt forums who are in similar situations to us and that’s really helped us to think positively.

Final Thoughts

What have you taken away from this advice? Here are three things I hope you remember:

  • Tracking your progress is essential, even if you are only taking baby steps
  • Don’t be shy about sharing your financial situation with a family member or friend
  • You will be faced with challenges, but keeping a positive outlook is essential

With this advice, you will find yourself working towards a debt free life one day at a time.

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