If you want to get out of debt, you need three things - a plan, some money, and lots of determination. I can’t provide you with the money or the determination, but I can give you some ideas for how to create an awesome plan.

• List your creditors, your current balances and your current interest rates.
  • If you want to rid yourself of those pesky smaller balances, regardless of interest rates, list your debts smallest balance to largest balance.  This method is commonly referred to as the Debt Snowball.
  • If you want to ensure that you will pay the smallest amount of interest, over the course of your debt reduction, list your debts highest interest rate to lowest interest rate.  This method is commonly referred to as the Debt Avalanche.  (Source: Consumerism Commentary)
  • If you simply have a debt that you want pay off first, regardless of its balance or its interest rate, list it first.  Then, list your other debts accordingly.
• Make minimum payments to all of you accounts.  For your credit cards, this would be the minimum payment listed on your monthly statement.  For your automobile loan, this would be the monthly payment.  Make a note of these initial minimum payments.

• Make an extra payment to the account at the top of your list.  When sending payment, write “apply to principal” on the memo line of your check.  Using online bill pay (initiating payments from your checking account to your creditors) is a simple way to send extra payments, without having to deal with envelopes or stamps.

• Continue sending minimum payments and your extra payment until the first debt on you list is paid off.  Then, combine your extra payment AND the minimum payment that you were sending to the first account, and send that combined amount to the second account on your list.  This is where the snowball / avalanche effect really starts to work.  Do not relax.  Remember how I mentioned that you needed a plan, money, and determination?  This is where the determination really matters.  It would be so easy to spend the minimum that you had been spending to the first account, but then you would lose the impact of the snowball.  Maintain your intensity and stay focused!

• By now, you have this figured out.  Once you pay off the second debt, send the extra payment and the two original minimum payments to the next debt on your list.  Continue combining these minimums and extra payments until you are debt free!

• Want to do even more to ramp up your debt reduction?  Don’t send one extra payment, send multiple extra payments.  Keep your eyes open for ways to reduce your interest rates.  Consider calling your credit card companies and asking them to reduce your rates.  Carefully consider consolidating credit card debt from higher rate cards to lower rate cards.

Click here to view the No Credit Needed Online Debt Reduction Guide or here to view and download the No Credit Needed Debt Reduction Guide E-Book.

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Recently, I published the online version of the No Credit Needed Debt Reduction Guide. Today, I’m releasing another version of that same guide - a free eBook. Simply click on the link below to download your copy. (Depending on your browser setup, you may need to right-click and select ’save as’ or ’save file as’.)

No Credit Needed Debt Reduction Guide eBook

The eBook is copyrighted. Feel free to share it with your family and friends. Please, do not make any changes to its content. At only 8 pages long, the eBook was designed to be a simple, step-by-step guide to reducing debt.

I would love to read your feedback. Download your free copy and let me know what you think about the guide.

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No Credit Needed Debt Reduction Guide (Quick Start Edition)

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 (Expanded Edition)

Section One: Getting Started

• Illustrated Debt Snowball
• How To Get Out Of Debt: Step 1
• How To Get Out Of Debt: Step 2
• How To Get Out Of Debt: Step 3
• How To Get Out Of Debt: Step 4

Section Two: Moving Beyond The Basics

• Make Multiple Debt Payments Each Month (Micro-Payments)

Section Three: Preparing For Freedom

• Managing All Of My Accounts Without Losing My Mind

Section Four: Staying The Course

• How To Create A Budget If You Have Irregular Income

Section Five: Planning For The Future

• What If You Make Maximum Retirement Contributions?

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No Credit Needed Debt Reduction Guide

Section Five: Planning For The Future

Budget For Future Purchases

Now that you are debt free, put a plan into place so that you can stay that way.

• Create budget categories for future major purchases. I have categories labeled ‘automobile replacement’, ‘new furniture’, and ‘new electronics’ .
• Commit to paying cash (or using cash equivalents) for all future purchases. If you do choose to use a credit card, plan to pay it off, in full, each month. I would strongly urge you to live without a credit card, at least for a few months, until you have changed your old spending/borrowing/purchasing habits.

Maximize Retirement And College Savings

In Section Three, you began to investigate the various retirement accounts for which you are eligible. Now is the time to focus your energy and to fund them in earnest. Personally, I make maximum contributions to my 403(b), a Roth IRA, and Education Savings Accounts for my children.

Inspire Others And Enjoy Giving

Find someone with whom you can share your story. Celebrate your freedom. Now that you have taken control of your finances, be sure to share you blessings with others who might be in need. When you don’t have to worry about debt payments, giving money away can be really, really fun.

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

You have been reading Section Five: Planning For The Future.

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

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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

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