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“A man in debt is so far a slave” ~ Ralph Waldo Emerson
Do you have huge debts? If yes, this provides you an excellent working plan and best practices to follow to become debt free.
If you stuck with debts, nothing related to financial planning work better for you. Whether to create an emergency fund or investments for future, debt push you back and give very little chance to get right success. Most of us might have debt and most of the time it is little and manageable. But, when it comes unmanageable and huge, gives a clear symbol of financial weakness. One of the first quality you should show when sinking in debt is, be bold. It is not easy to eliminate debt in a fortnight but, an intelligent planning supported by disciplined action, would certainly take you out of debt slowly but surely.
What should be the first and important move to become debt free? Be bold. We have options..
Simplest Ways to Become Debt Free These are the simplest and excellent, working plan for families and individuals to follow and become debt free gradually and completely:
Smart Beginning – A person who suffering from huge debt should start his work from the scratch. At the very first, make your family members aware about what you are going to do. Ensure full support from your family members, relatives and close friends until you reach to the goal. Start by listing all the debts in a paper. Prefer to list down debts based on its interest rates and sort it from higher interest rate to lower. At the end, you will be able to identify which debt has more interest rate and eating up your money more.
Right and Tight Planning – Prepare a well disciplined plan to eliminate the debts gradually but regularly. Start from self by reducing your expenses to minimum. Tight your monthly budget for family spending. Count and make each penny work for you at this point. Avoid spending on anything other than the necessities like your monthly bills, food, transport etc. this is not the time to purchase costly cloths, video games etc. Be self disciplined to live within the budget along with other family members. Cancel additional credit cards and start using credit cards only at emergencies. Stop all the activities like eating out, leisure, monthly shopping, traveling, holidays etc., but focus to save maximum money until being debt free.
Prepare self to the journey – Prior to start the debt free process, identify and set aside
a small amount as emergency fund to head off any unexpected crisis. This should be in a separate account as untouchable. This will work for you as an emergency fund to meet any crisis happening at the middle of your ‘being debt free’ journey. This reserve money ensures you to not touch on the money kept for paying off debts.
The Painful Start : Start eliminating your debts one by one by paying maximum amount to the debts which have high interest rates and minimum amount to the one in your list which has lower interest rates. Pump maximum money to the one with top interest rates to eliminate that debt first. Continue this process to the next in list until eliminating the final one in your list. .
Support your journey – Consider creating additional source of money to pay off the debt. Having a second income through any family member would be a great help to focus more to kill your debts. Explore and identify all possible sources and work to generate maximum possible additional income to support your action. Consider to sell/rent all those items, spaces, vehicles that you are not required more.
Monitor the status – Record each and every activity and analyze progress of your action. Any mismatches to any items found, take necessary actions to rectify that. Give clear attention to the bills, credit cards or wherever money involved.
Once become debt free, stick with your budget to not fall to the debt trap again. At this time, rework on your family budget to get some relaxation. Cut down all unnecessary expenses, identify and generate secondary income stream, prepare your plan to shield yourself and family from panic situations like economic recessions.
Dedication and discipline are the two most required qualities a person should show and sustain with fail proof financial planning. Being debt free is not simple if you don’t have well decided mindset and clear working plan along with dedication and discipline.
Once after being debt free, never commit the same mistake again. Be disciplined on self and family expenses, credit card usages, borrowing etc. Preserve each penny for a bright feature of self and family.
Reference: To those who really required a realtime scenario, visit and read the story about
Couple pays of $185,000 in debt on path to ‘Financial Peace, at: