Erase Debt

Attempting to Erase Debt is often looked at as being hard or difficult to do. But actually it is quite easy. You just need to have a plan. Here are 5 easy steps to consider when you want to get out of debt.

Step 1: Admit that you have a debt problem. Admitting that you have a debt problem, whether it’s charging too much on credit cards or adknowledging that you own too many credit or store cards is the first step. You can’t begin to erase debt until you are able to admit to yourself (and maybe oothers) that you have a debt issue.

Step 2: Make a list of all your debts. This ties into step 1 and is part of acknowledging that you have a debt issue. You can’t know where to start until you have some sort of blueprint in front of you. And that blueprint will be your list of debts to attack. List out every debt you have (you can even put down your motgage if you’d like) but list EVERYTHING! You cannot forget, by accident or on purpose, any of the debts. Many people will purposely not add a debt to the list on purpose because it’s a way of ignoring the problem. Part of your success in erasing debt will be how well you acknnowledge each and every debt you have. List your debts starting with the smallest debt to the hightest. Place them all in a column, one above the other.

Step 3: CREATE A BUDGET. The dreaded B-word. Everyone has a story or excuse or reason why they can’t create a budget or stick to a budget or a budget doesn’t work for them. I’m here to tell you that a budget does work if done properly. I’ve done it wrong and I used all of the excuses in the book to avoid creating one. But a monthly budget that is constantly reviewed and updated is the KEY to erasing your debt. Oooh, that sounds like work. Well, yes it is….

Step 4: Maintain Your Budget. You cannot create one budget and then think that that one budget is going to be the same budget used, month-after-month for the next few years until you get out of debt. If you do that you’ll be frustrated by month two and your budget will go down in flames as a miserable failure as most budgets do. A budget has to be modified every month to meet the needs of your family’s life style. Maybe even updated every week until you feel comfortable with it. And then even when you are out of debt, you will need to continue with a budget. The one guarantee I have for you if you stop doing a budget is that once you stop doing a budget, I guarantee that you’ll be back in debt again. Once you get use to managing a budget, it shouldn’t take up a lot of your time.

Step 5: Include Everyone in the Budget. Be sure to communicate with everyone in the family (spouse and kids) about the budget. Everyone needs to be on the same page and rowing in the same direction. You can’t have a wife following the budget and the husband off buying tools that weren’t budgeted for. It won’t work. EVER! Even tell the kids about the family budget. Now a nine year old doesn’t need to know all the finite details. But make them aware that there is only so much money. And that money is allocated to certain things. And some things are “not in the budget.” They will catch on soon and before you know it, they will be telling you what is not in the budget.

Bonus Step: Just Do It! Like the Nike ad says, “just do it!” Start living on a budget. It’s all fine to create a budget and talk about it. But if you don’t implement it, it will never work. What’s the worse can happen if you go on a budget. You finally may actually start to understand where all your money is going. That may be scary at first but eventually it will feel liberating and you’ll soon erase that debt.

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