No Credit Needed Debt Reduction Guide

Section Four: Staying The Course

Look For Opportunities To Earn Extra Income

As you move forward, you’ll begin to get excited about getting out of debt. Now is the time to look for ways to supplement your income. Consider getting a part-time job. Look through your closets for items you can sell on eBay or Craigslist. Have a yard sale (or two). Take advantage of you talents and look for new ways to use them.

Learn To Celebrate Your Victories

When you pay off your first credit account, take some time to savor the moment. If you are married, schedule a special dinner with your spouse. You don’t have to spend money in order to celebrate! Simply take an afternoon off and read your favorite book or spend some time listening to your favorite album. If you have an accountability partner or good friend, share your news with them. Getting out of debt is a big deal, and you should feel good about your progress.

Start Over

Have you stopped following your debt reduction plan? Are you discouraged? Have you had emergencies or unplanned expenses, which have hampered your progress? We all face challenges and obstacles. Take a few deep breaths, gather your thoughts, and start over. Take a look at your calendar and block out a few hours for yourself. Sit down, reevaluate your plan, and get ready to move forward. Remember, it took time to get into debt and it’s going to take time to get out.

Thank you for reading the No Credit Needed Debt Reduction Guide.

You have been reading Section Four: Staying The Course.

Please bookmark this page or subscribe to the No Credit Needed RSS Feed to insure that you receive all sections:

Section One: Getting Started

Section Two: Moving Beyond The Basics

Section Three: Preparing For Freedom

Section Four: Staying The Course

Section Five: Planning For The Future

No Credit Needed Debt Reduction Guide

Section Three: Preparing For Freedom

Build A Substantial Emergency Fund

After getting out of debt, you next goal will be to stay out of debt. To that end, consider creating and funding a substantial emergency fund. The exact amount that you will want to keep in your emergency fund will vary, according to the number of people in your family, but a good rule of thumb is to try to maintain an account with enough money to cover three to six months of expenses.

• Open an account – online or at your local bank – for you emergency fund. Personally, I prefer an online savings account, but you could choose a money market account through your local bank or just a simple interest bearing checking account. The primary purpose for this account is to ‘hold’ your money, in a safe place, until it is needed. Money inside your emergency fund should be set aside for emergencies and should not be invested in stocks or mutual funds.
• Use the same techniques that you used for debt reduction, only use them to pay yourself. Send as many payments as you can, as soon as you can send them, to your savings account and rapidly build your emergency fund. Use online transfers to automate the process.

Fund Various Retirement Accounts

There are so many different types of retirement accounts. Most employers offer 401k plans or 403b plans, many government employees are eligible for pension plans, and most wage earners are eligible to invest in Roth IRAs or Traditional IRAs. Research is your friend. Find out which types of accounts are available to you and your spouse and then begin to fund them. The suggestions for what percentage of income to invest in retirement vary. Personally, I invest maximum amounts in my 403b, Roth IRA, and SEP-IRA. My wife invests maximum amounts in her pension plan and a Roth IRA. Our contributions amount to a substantial portion of our gross incomes, but our long-term goal is to live debt free and without borrowing money.

Thank you for reading the No Credit Needed Debt Reduction Guide.

You have been reading Section Three: Preparing For Freedom.

Please bookmark this page or subscribe to the No Credit Needed RSS Feed to insure that you receive all sections:

Section One: Getting Started

Section Two: Moving Beyond The Basics

Section Three: Preparing For Freedom

Section Four: Staying The Course

Section Five: Planning For The Future

No Credit Needed Debt Reduction Guide

Section Two: Moving Beyond The Basics

Reduce Monthly Interest Charges:

• Send minimum payments and extra payments as early in the payment cycle as you possibly can. This reduces your average daily balance which reduces the amount of interest charged.

Transfer Balances Carefully:

Consider transferring debt from one creditor to another, but be smart. If you move credit card debt from one card to another, understand the terms of the balance transfer. Many cards charge a balance transfer fee. Do the math. Calculate the amount of interest you will pay if you keep debt on your current card, the amount of interest you will pay, plus the balance transfer fee, if you move debt to a new card. Also, keep in mind that most cards offer low rates for a limited time, only. Refer to your debt reduction plan, created in Section One: Getting Started. Will you be able to completely pay off the transferred balance, before the low rate goes away? If not, be prepared to pay a much higher interest rate or complete another balance transfer.

Using equity in your house to ‘pay off’ debt can be dangerous – and must be accompanied by radical behavioral change. I would never suggest using a home equity loan or line of credit to pay off unsecured credit card debt.

Make Multiple Extra Payments:

As you work your way through the month, consider sending more than one extra payment to the account on the top of your list. If you receive unexpected income or a gift of cash, use it to reduce your debt. By using micro-payments, you can reduce your debts even more rapidly than your initial debt reduction plan might suggest. Also, if you underspend in a particular budget category, use this ‘found money’ to reduce your debt. Look for ideas, every day, to save money that can then be used for debt reduction.

Thank you for reading the No Credit Needed Debt Reduction Guide.

You have been reading Section Two: Moving Beyond The Basics.

Please bookmark this page or subscribe to the No Credit Needed RSS Feed to insure that you receive all sections:

Section One: Getting Started

Section Two: Moving Beyond The Basics

Section Three: Preparing For Freedom

Section Four: Staying The Course

Section Five: Planning For The Future