Debt Reduction

Getting Out Of Debt: 10 Ideas About How To Begin


I am writing this post in response to the MANY emails that I have received since my interview with WSB aired Friday.

First, I am NOT a personal finance expert and I do NOT give “advice”. I simply talk about WHAT I DID and WHAT I DO. In other words, if you choose to “listen” to me, you do so just like you’d listen to a friend “across the fence”.

Here are the first things that I DID whenever I decided to get out of debt:

1. I stopped using my credit cards. I did not “cancel my cards”. I did not “cut my cards up”. I did not “put my cards in water and freeze them in a block of ice”. In other words, I did not use any gimmicks. I simply made a firm (and final) decision that I would stop using my credit cards, no matter what! (Please note, the “no matter what” does NOT include a life-or-death situation involving the health and wellbeing of my wife or children. But, you get the picture. No Credit Cards allowed for NCN.) After you get out of debt, you may choose to use a credit card, but, for me, I had to go COLD TURKEY!

2. I created a list of ALL of my debts. I wanted to know EXACTLY where I stood, financially. I wanted to know, to the penny, how much I owed and to whom I owed it. I also listed the various interest rates associated with the various account balances.

3. I made a firm and full commitment that I would NEVER pay less than the minimum payment. Also, all of my payments would be made on time. For me, on time meant (at least) one week early.

4. I balanced my checkbook. (I have always been responsible with my checkbook, but I find that MANY, MANY people who are in debt have NO IDEA what their true checking account balance really is!)

5. I created a budget! (Again, I highly recommend the following resource, a sponsor of my site: You Need A Budget)

6. I vowed to talk TO my wife (and not AT my wife) about money and finances. (We’ve always had a good marriage, but being able to talk about money has taken a good marriage and made it great.)

7. I created a plan to get out of debt that was realistic AND challenging. In fact, I “missed” my goal date by 3 months, but I still paid off over $11,500 in less than a full year!

8. I looked for alternative sources of income. (Personally, I used eBay to make some extra cash. May I suggest a second (or third) job, a yard sale, consignment shops, or looking for a new job.)

9. I read and read and read and read as MANY books as I could find about debt reduction. May I suggest this page for a list of some of the resources that I used while getting out of debt?

10. Before I began to pay off my debts, I made a commitment to saving up a “mini-emergency fund” of about $1000. (Depending on the size of your family, a “mini-emergency fund” might be $500 or $2000.) The purpose of this fund was to keep me from using a credit card in the event of an “unplanned for” expense, like a blown tire, a broken washing machine, or a chipped tooth.

I hope that you are excited about getting out of debt and living debt-free. Click here for a collection of my most popular posts about debt and debt reduction.

10 thoughts on “Getting Out Of Debt: 10 Ideas About How To Begin

  1. I myself don’t have a credit card as well. With our $1500 mini emergency fund and 4 months of expenses saved. Who needs a credit card!!!

  2. Good stuff, I found NCN’s step #2 to be the most important part of my debt repayment plan. Figuring out how much total debt we had was a serious wake up call.

  3. Pingback: Low Interest Credit Cards WebLog » Blog Archive » Mortgage Loans | Get Out of Debt | Homeowner Loans | Debt Elimination
  4. I cannot live without a credit card. But I managed to reduce my debt. I tried to learn more about credit deals , I found out all the details I could. Now I use my credit cards more wisely and I am not afraid of debts. Now I don’t think that credit cards are evil any more, but find them very useful and convenient tools that let to make life easier.

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