subject: How To Clear Your Debt And Live A Debt Free Life [print this page] In today's economic climate unfortunately there are a great many people that have accrued significant debt by mismanaging their credit cards or even their finances in general. The internet has not helped the situation, because it is so much easier now to type a search into your favourite search engine and be presented with a huge list of places that you can buy the latest gadget or latest fashion from your favourite designer.
Everybody wants to have nice things, and does not want to be outdone by their friends or colleagues. So when the latest state of the art mobile phone or other such must have item starts to appear in the office or the pub, it is just too easy to get your little plastic friend out and get one for yourself. This is a dangerous path to travel down because you can get your bottom dollar that today's state of the art technology will be obsolete before you have finished paying for it. In fact it will probably be superseded several times whilst you are still paying for it.
So how do you break the cycle?
The first stage is for you to realise the futility of your actions, unless you are a multi millionaire you are never going to be able maintain your gadget fixation. You need to write down a list of everything you have spent on your credit cards and what it cost you to buy. You then need to try and work out what the overall cost to buy these things will be including the interest that you are paying each month to the credit card company. You should also ask yourself if each item you have purchased on your credit card has improved your life in any way or has it just added to your debt.
You should then write down a list on a separate piece of paper everything that you owe and how much each of your debts costs you each month; you should also make a note of all your sources of income including any family tax credits or any benefits whatever they may be. You should also list any other monthly costs such as what you spend each month on food, clothing, energy, petrol for your car etc.
Once you have compiled this list you need to take a long hard look at what you can do to reduce your monthly spend so that you can allocate more of your monthly income to whittling away at your outstanding debts. You should also get into the habit of putting something by every month into a savings account, if nothing else only to develop good habits. Once you have decided what can be trimmed out of your monthly budget you should then look at which of your debts is costing you the most in interest, and add some of the savings you have made to your monthly payment to that debt.
You then work through your debts one by one until they have all been repaid, making sure that in the process you are not adding to them by spending anymore on your credit cards. Also by maintaining your monthly commitment to saving a little something every month you should also be well on the way to building a little nest egg.
by: Mark Dawson
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