Happy Tuesday wonderful people! I have created an easy to remember, step-by-step approach to becoming debt free. My four-step plan – assess, budget, create, and destroy can help you become debt free.
Assess the situation and find out how much you owe and to whom. Use the National Student Loan Data System for federal student loans. For other debts, check your credit report from one of the three reporting agencies (Experian, Equifax, or TransUnion) for free. Make note of the lenders. Contact them to get the current balance, minimum payment amount, and payment due date for each account. Lastly, rank the debts according to balance (lowest to highest).
After you have assessed the situation, get on a budget. A budget is a roadmap for how you will become debt free. Estimate your income for a given period and figure out all your living expenses. Next, figure out how you can decrease your expenses. Each time you cut an expense out of your budget, you are finding extra money for debt repayment. The more expenses you remove, the quicker you will become debt free.
Once your budget is set, figure out how to create multiple streams of income. Find creative ways to make money through overtime, side jobs, or a low-cost business. The more money you earn, the quicker you will become debt free. Once you start earning more money, avoid lifestyle inflation and stick to your budget.
Destroy debt. Make the minimum payments on all your debts, except the one with the lowest balance. Take the extra money you found through budgeting and working extra jobs and apply it to the debt with the lowest balance. Keep applying extra money to the debt until it is paid in full. After that, roll the extra money to the debt with the second lowest balance. Keep using this strategy until all your debts are destroyed.
Becoming debt free requires knowing the first 4 letters of the alphabet. Remember to asses, budget, create, and destroy to become debt free! Comment below and let me know your thoughts about the ABCD’s of becoming debt free.
Join the Debt Free Squad
I hope you will join the squad. Joining allows me to spread awareness about the benefits of living debt free to more people. Here is how you can join:
- Follow on Twitter and join in the conversations.
- Get notifications for new posts by following Slim Fit Wallet on WordPress.
If you are already apart of the squad, thank you!
By Simone, creator of Slim Fit Wallet