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Debtors Anonymous: 12 Steps to Breaking Free from your DebtsFollow these 12 steps to debt-free nirvana.
Nothing robs your peace of mind more than worrying about debt: sleepless nights, hiding from creditors, piling collection letters. This was the experience of JP, a publicist steeped in credit card bills. The anxiety made her sleep the whole day, waking up only when the collectors stopped calling late in the evenings. Until one day, she felt she had enough and decided to regain control of her life.
JP sold most of her things to pay off her debt, knowing that she could have them again if she worked hard and learned to control her spending.
Though getting out of debt is as difficult as quitting an addiction, it is still possible to reclaim financial health. Follow our 12-step path to debt-free nirvana.
1. Face your debt, no matter how scary.
Gráinne O’Malley, a financial and life-balance coach based in Northern Ireland, shares this piece of advice: Tell yourself the truth about your finances, and acknowledge the fact that it has become unmanageable.
2. Take stock of your debts.
Identify and list ALL your debts (credit-card purchases, housing loans, medical fees, wedding expenses, car loans, etc.). Get the sum of your debts, including interest, late payment fees, and over-limit charges. “Really take these numbers in,” writes budget coach Judy Lawrence, author of The Budget Kit: Common Cents Money Management. “This is very important for creating an effective plan and moving you to a debt-free life.”
3. Be aware of your spending habits.
You may have unconsciously incurred debts by buying things you don’t need—small amounts add up. Lawrence recommends that you become more conscious of your language and thoughts. “Do you focus continually on the debt, or on solutions? Are you constantly talking about ‘always being broke?’” The most important step, she notes, is to change the way you think about yourself.
4. Make it your conviction to stop spending unnecessarily.
To get out of debt, you must be strategic and deliberate. If you have debts incurred from credit cards, stop using them.
Like kicking a habit, it is best to go cold turkey than letting go slowly. If you can’t do it, make the necessary changes. “Start using only cash or check—money you actually have, see, and feel,” writes Lawrence.
Put your credit card in a safe place, not available for everyday use. Also, do not accept increases on your credit limit.
Create a simple table jotting down the money you owe from whom, the minimum payment, interest rates, and their deadlines.ADVERTISEMENT - CONTINUE READING BELOWCONTINUE READING BELOWRecommended Videos
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