How to Get Out of Debt
I have made mistakes and paid for them when it comes to finances. But I have learned from them and have found out that a credit card is not a necessity. A mortgage is not a right of all Americans. And when it comes time for people who tell me they are having problems with money, I ask them some simple questions and then maybe I can feel sorry for them.
Things happen that you cannot foresee and then I understand that people get into difficulty with money. But when people go out and run up debt into the hundreds of thousands of dollars and then start to worry about it, I am not going to be sympathetic. I have seen people who try and try to get things like credit cards and mortgages and have themselves turned down and get mad.
I don’t understand why they are so upset. If they got themselves into a bad credit situation, then they have only themselves to blame and have to pick themselves up and move on. When people have things like illness and injury and have to pay that off, they have those unexpected things happen that I feel sorry for them about.
When you have good credit you can buy all kinds of things, and that is the problem. I remember getting an encyclopedia set when I had just gotten married, how dumb. But I learned from that expensive purchase. I learned that if you don’t have the cash, it had better be something that you use to get money. I mean that when you make a purchase like a home or a car, that is one thing, those are things you may need to live and work.
But a sports car is not, and do not tell me that a sports car is more important than paying off the debt that is already there. I have heard and seen people who go out and make one bad decision after another with debt and cannot find a way out. They have in their power a way out but do not want to take it.
Here are some tips to help you get out of debt and try to stay that way. What you want and what you need are two totally different things. You need things like a home or place to live. You need food, water and clothes to wear.
You want things like a computer, a TV, a DVD player or that great new car. Are these things that you need or want. That is the bigger problem that people have when it comes to purchasing items, they think they need it when the just want it. Many people justify buying things by saying and thinking they need it. Well, it’s time to really look at what you want and need, if you have a debt problem.
If you are in debt and want a way out there are things like consolidation loans and selling things that are worth money, but these just get the creditors off your back. When all the creditors are gone and you are sitting with that shiny credit card will you rush out and send that bill back up toward the limit again.
Let’s hope not, for one time you make a mistake is okay, you live and learn from these things called mistakes. But to go out and do the same thing is foolishness after the first time. Or maybe it takes a couple of times to learn, some people, me especially, are a little thick headed and need a couple of good kicks to get it up to our brain that it was a mistake.
If you dread the phone ringing because it is most likely a creditor that wants a payment. If you hate when the mail comes instead of rushing out to get that new magazine. If the only good thing about your bank is that they cash your paycheck before you have to give most of it back to them. Then it’s time to start looking at your spending habits and how to change them.
So after the first time you learn, but for now you need to get out of debt. Get out and take stock of your situation with new eyes and do not look at the things you have as needed items. Look at them as cash waiting to be used. That’s right it’s time to liquidate, get rid of those things that cost you and try to get some money back to the creditors who are hounding you.
Have a garage sale, sell anything that you do not use to go to work with. I mean it, if it is not a work related item it can be sold and used to pay off bills. This may seem a drastic thing to do in a bad situation but it is a way for you to get some money quickly to use toward bills that need to be paid. I’ll go into how to pay them in a minute.
But first back to getting cash, sell that dumb exercise bike, use your feet for once and get some exercise from walking. If it is not something like the car, which we will get to in a minute, then sell it if it is worth something. Exercise equipment is worth money if it is in decent shape and a lot of towns have second hand stores for them.
That new TV is not going to help you get any money from your job, unless it is part of it, so get rid of it. Sell it and use the money to pay the bill from it. I know this is going backwards, paying the bill for something by selling it, but you got yourself into debt and want a way out.
So if you can’t get a liquidation loan or just don’t want to, try getting out there and doing something about it. And the first thing you can do is sell the things that you can and get some money for them. It does not have to be a lot or the things you sell do not have to be everything you own. But sell things that you don not use and have paid a lot for. It may hurt but you can get the money and the creditors off your back.
Now after you have tried to sell things like electronics, clothes and whatever at your garage sale, sell anything else you can at places that buy second hand merchandise or electronics. This will get you some cash fast, and you will not be able to spend it on more stuff. You need to use it for groceries or bills that are legitimate.
And now I will explain what I mean by legitimate bills. Bills that need to be a part of living at your home and things that you have that are debts are legitimate bills. Anything else that is not a necessity of life is going to be shut off. Cable TV is not a necessity, nor is any games that are on the internet that you pay for on a regular basis.
Any monthly checks or bills you pay that are not rent, utilities, or payments to creditors have to stop. You do not need Cable TV or anything else that is money going out. You can do without those kinds of bills till you get back on your feet. And speaking of monthly bills, internet service is also a luxury unless it is absolutely required for your job.
Yes, I know it is nice, I make part of my living on the internet so it is required as a part of my job, but how about you? If you get email and talk to friends and such, if you play internet games and download things for your pc games, it’s not necessary to your living. Get rid of it till you can afford it.
The thing here is to spend less per month and have more money to pay off the bills. Now on to that part, how to pay all those bills when they are all bugging you for payment. Take the lowest one and take all that money you got from selling stuff and pay it off. Or pay them the most, don’t give some of it to all of them. Make your minimum payment to the rest and forget about them for the moment.
If you pay off one bill you can send that extra money that had been going to that bill and send it to the next lowest. And so on till you are debt free. In order to understand one of the reasons behind me telling you to pay off one of the debts instead of paying to all of the ones you owe you have to understand about interest.
Interest is the amount that they charge you for borrowing the money they gave you. If they give you one thousand dollars at ten percent interest and have to pay it back in one year you will pay them back one thousand and one hundred dollars. That one hundred dollars is what you give them for borrowing their money.
For credit cards and such you have to pay them monthly for that interest. This means that if you borrowed a thousand dollars and are supposed to pay it back every month, that first month you will owe for that entire thousand dollars plus the interest on it. The first payment is calculated at ten percent interest, so 10% or .01 x $1000 = 10. You owe ten dollars that first payment. Lets say you are at pay them $100 dollars a payment. That means that ten dollars goes to the interest, that is the money you owe for the privilege to borrow the money. The rest, $90 goes to pay the balance of the loan, which is $1000 to start.
After the first month you have a balance of $990, and for the next payment of one hundred dollars, you have to refigure the loan. .01 x $990 = $9.90. This mean that the next payment gives $9.90 to pay for the loan privilege or interest and the rest, $90.10 goes to pay the balance. This is continues until the loan is paid off.
If you pay more to the balance than the minimum payment you get out from that interest faster. But if you get rid of the loan altogether, that is one less minimum interest you have to pay instead of continuing to pay on all of the ones you have and paying them all off with minimum or slightly higher payments.
So, pay off the lowest owed loan or debt you have and you will be out of debt faster. This works, I know ,I have done it. I used to be in debt and started to have the phone calls and such. The I got smart and started to get rid of the things that was causing the debt. Yes, I got rid of those cards. You do not have to cut them up, but you will not use them. Whatever it is you want to use them on, don’t. It’s that simple, put them into a safety deposit box and forget about them for now.
If the need is just too great then it is time to cut them up. Getting more debt is not how you are going to get out of debt. You need to not use them. For me, cutting them made sense and I could get more later if I wanted. I didn’t want to. I now have a debit card that works just like a credit card at stores and it is all I need.
I can order things online no problem, I use PayPal for getting money from people who owe me for work such as articles I write and the money goes into my account. If I needed a credit card I cannot see a reason to want it. I will not go into debt like I had done ever again. Yes someday I plan to buy a new or used car and get a home.
That is another story though. I will get the car or home with a good down payment and work like a dog to pay them off early. I will not do things like get cable TV or buy things I don’t need or can’t afford when I have bills that I can’t pay. Right now I pay off all the bills I have every month.
The only bills I have are the ones I need; utilities, rent, internet and phone by the same company and car and health insurance. I have a car that is old but it runs. I do not need a second car, my work is at home and within walking distance, and if I want to use the car I can use it after taking my wife to work.
I am pointing out these things because it is an example of how you can live happily with a minimum of vehicles or luxuries and still have a good life. Yes it would be nice to drive a fancy car, but I don’t need to. I need to get my kids to school and help them get a good education. I need to help my family, and to help myself in ways that are important, but I don’t need to have all kinds of luxuries and that is the important point.
Needs are things that are required for you to live. Wants are things that make you happy, you have to choose the wants to make your life happy and take care of the needs to live.
