Back To The Basics: How To Get Out Of Debt
Are you ready to get out of debt? Great! Here’s one method that works. In fact, it worked for me!
- List all of your debts (including or excluding your first mortgage).
- Make your minimum payments (on time) each month.
- Send extra payments to a single account -
- The account with the highest interest rate (or)
- The account with the lowest balance
- Continue to make minimum payments and extra payments, until first account on your list is paid off.
- Take the minimum payment that you were sending to the first account, combine it with the extra payments, and send this entire amount to the second account on your list.
- Continue this process of paying off accounts, combining those minimums with extra payments, until you are debt free.
Click here to see an illustration of how this debt reduction process works.
Once you get a hang of the process, here are some additional ideas that you might want to keep in mind -
- If you get a chance to move debt from a credit card with a high rate to a credit card with a low rate - do it! But, only if you understand the terms of the balance transfer. (Be sure to figure in any balance transfer fees, before you pull the trigger.)
- In most cases, you do not need a debt consolidation company. If you will create a plan, and stick to it, you can get yourself out of debt.
- It NEVER hurts to call your credit card company and ask for lower rates. (Also, you can call your phone company, cellphone company, satellite provider, etc. and ask for discounts. The more money you save, the more money you have for debt reduction.)
- Every dollar matters. Even if you only have two extra dollars to send, send those two dollars.
- Before you start sending extra payments, be sure that you have some money set aside in a ‘rainy day fund’. The amount of money in this fund will vary, according to the size of your family. (You’ll need this fund, just in case you have a mini-emergency. This fund will keep you from having to use your credit card. I always kept (at least) $1000 in mine.)
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[...] Read the rest of this great post here [...]
Nothing like getting back to the basics.
Just reading this is motivation to continue the debt reduction process.
And stop eating out, sell the gas guzzling full-size Ford truck, don’t buy the coolest cell phone, don’t buy the newest ipod, no vacations.
[...] Credit Needed goes back to basics about getting out of debt. It’s a good reminder and consolidated [...]
[...] No Credit Needed goes back to his roots with Back To The Basics: How To Get Out Of Debt. [...]
[...] Credit Needed: Back to the Basics: How to Get Out of Debt. NCN was one of my very first bloggin inspirations, and he continually relates back to the very [...]
[...] Credit Needed: Back to the Basics: How to Get Out of Debt. NCN was one of my very first bloggin inspirations, and he continually relates back to the very [...]
[...] Credit Needed: NCN talks about some basic ways to get out of debt based on his own personal experience. Nice bonus: it includes a link to a post that illustrates how [...]
Is putting money in a ‘rainy day fund’ really worth it if we’re paying 16% on credit cards and, if a mini-emergency came up, we could just put it on the same credit cards anyway?
[...] order to get out of debt, NCN at No Credit Needed suggested going back to the basics such as knowing clearly the debt situation and making more than necessary payments, [...]
Young - In my opinion, the mini-rainy-day fund is an imperative. I find, and this comes from 3 years of emails from folks who are in debt, is that people who put their
credit cards away and refuse to use them are much more successful than those who don’t. That being said, to each his/her own. But, if you continue to give yourself a cushion to ‘fall back on’ — you’ll (more than likely) continue to fall back.
NCN
[...] lists 6 simple steps to get out of debt in Back To The Basics: How To Get Out Of Debt at No Credit Needed. NCN used this method…. proof that it [...]
I am convinced this is the best way to get out of debt, though I tend to lean towards a slightly larger baby emergency fund to cover major financial emergencies.
Excellent post on debt. Really it is praiseworthy that you have given very good explanation on the debt. Your ways are also worth to follow when we want to get out of debt. Thanks for this interesting post.
[...] Back to the Basics: How to Get Out of Debt A nice rundown from someone who’s walked the walk. Also be sure to check out his [...]
Great blog, thanks for the great advice. It is a very important time to be getting out of debt and staying out.
[...] of course, I’ve written several posts about debt reduction, including this recent post about the basics of debt reduction. If you are new here, please consider subscribing to receive content via RSS or [...]