How To Get Home

Warning: This page is going to ask you to be honest with yourself and your family about your debt. If you are ready to make changes in your life and work toward financial freedom, keep reading. If just being able to make your minimum monthly payments does not bother you, read this, rinse and repeat.

If you are like most Americans, you have tried to “get out of debt” and failed on some level. In order to be successful, you need to understand why you spend. If you don’t understand the root of the problem, you can not fix it. It makes no sense to spend money you do not have. People do not spend because it makes sense, they spend because it makes them feel better. Let’s take a look at your situation first before we try to come up with the answers.

Step one: Understand your current income and debt. To do this -Complete this budget worksheet. It will take less than 10 minutes. You need to know everything you have coming in and going out so that you can get control of the situation. Adding up all your real expenses will give you a true appreciation for what you are up against. This brief exercise is to let you see how much you are coming up short each month or how much money you have left each month after everything is paid. If you are spending more than you are making, it is time to start cutting expenses. Unlike the US Government, you can not continue to spend more than you make, if you are serious about getting out of debt.

Step two: List out all your monthly debt on this worksheet. This debt would include any installment and revolving accounts you have. This will also take just a few minutes to complete. You might be amazed at some of the interest rates you are paying on some of the credit cards. You might not believe how much that trip to Sears cost you at 21.98%

Step three: Create your action plan. Now that you have all the information in front of you, it is time to plan your attack. In order to maximize the amount you are sending to your creditors every month, let’s make some tough decisions about the expenses in the budget. Eating out, massages, vacations, and the dish network are not helping you get out of debt. If you are going to get serious, start with all the discretionary spending. Mexico is not going anywhere. It will be there when you are debt free. Take the budget worksheet and the debt worksheet and put it on the front of the fridge. Look at it everyday. If you bury these in your desk, you have missed the point of this exercise.

Start paying off the debt with the highest interest rate first. If your very comfy sofa is at 0% and your 60 inch plasma is at 19.99% - start with the TV. Keep paying on the highest rate debt until it is paid off. Once paid, mark it off the list. Congratulations!! Next month, less mail. That is what we are working toward - The Empty Mailbox.

As you pay down your debt, you will begin to notice a change. Your sense of self-worth is not coming from your 2 shopping cart trip to Target, it is coming from a new-found belief that you can take control of your life and your debt. Positive self image is a very important concept in life to understand. Why people spend is harder to understand than how to pay off debt. A very wise man once told me, “You got to change it on the inside first.” Be honest with yourself and get serious about what lies ahead in life.

For some, the situation is more severe than others and will require more drastic changes to make progress. When I finsihed college, I moved home for 2 years to get out from under my credit card debt. No fun for sure, but I learned a very important lesson: don’t spend money you don’t have. This exercise was kept short in the interest of keeping your attention. Here are a few books on the subject matter that will help you change your life and spending habits forever.

Money Harmony - Resolving Money Conflicts in Your Life and Your Relationships

9 Steps to Financial Freedom: Practical and Spiritual Steps So You Can Stop Worrying

The Money Book for the Young, Fabulous & Broke

And speaking of credit card offers, here is an excellent link to the Federal Trade Commission’s site which has the best information about the various types of credit card offers. PLEASE make sure you understand what you are about to sign up for when you get the endless amount of offers in the mail.

Tired of getting so much junk mail from credit card issuers? Next time they send you an offer, rip it up into a hundred pieces and then use their postage paid envelope to mail their garbage back to them. Maybe one day they will stop sending so many solicitations in the mail.

Read over a great article about the 9 Money Rules to Live By.