9 Steps To Financial Freedom By Reducing Debt
June 22nd, 2009 | 
Author: 9 Steps To Financial Freedom By Reducing Debt
Theres nothing more unrealistic then to have a financial expert advise everyone to stop getting hair cuts dont buy a cup of coffee cut off your cable and the one that really boils my blood is dont eat out. Its just not realistic for everyone. In fact its like telling an overweight person to just stop eating. Its not going to happen at least not overnight. While this is not bad advice there are other ways more realistic that will lead you to financial freedom. Start by gradual change because you are more likely to stick with it and not feel deprived.
1 Create a budget
The first step to financial freedom is creating a budget you can stick with. Begin with the household necessities such as mortgage rent utilities car payment and insurance. These are your fixed expenses. Next tackle your variable costs such as groceries cell phone credit card bills entertainment and clothing. Once you have these items budgeted take a look at what is left and then create a reserved budget for dining out vacations hair stylists and pampering needs. Be realistic and set reasonable constraints on these items.
2 Rebuild your credit scores
The cost of having bad credit is immeasurable. If you are going to be financially free you must improve your credit rating. It makes a huge difference in the amount of money you save by having a good credit score. The bottom line is that lower interest rates equal money saved. For instance if you have a 400000 mortgage at a 6.00 30year fixed interest rate your monthly payment will be 2398. That same 400000 mortgage at a 9.00 30year fixed interest rate will be a monthly payment of 3218. Thats a difference of about 820 a month!The same rules apply with automobile loans credit cards and other types of bank loans. The better your credit score the lower your interest rate and the more money you save.
3 Create a good cushion
You never know when youll need money outside of what you have budgeted. Auto repairs an emergency out of state trip plumbing problems.you name it.it could happen. The money you save by having a budget and sticking to it should go into a savings account. Having a savings account not only gives you peace of mind but also keeps you from incurring more debt when an emergency occurs.
Instead of relying on your credit card or creating more debt when an emergency occurs you can use your cushion. Just as you have a budget plan have a savings plan also. Pay yourself first. Start with at least 10 of your income. You may even want to include it in your fixed expenses budget as a line item. The funny thing about saving money is that it can be addictive. The more you save and watch your savings grow the more you want to save. You become accustomed to seeing that money in your savings account increase each month. Start saving today. No more excuses.
4 Cable T.V.
I know I said its not realistic for everyone to just cancel cable and Im going to stick to my word. However you can save money on your cable bill by limiting your premium channels and not ordering payperview movies. You can save money each month by having just one premium channel instead of four. Depending on how much you pay for premium and payperview channels you will save hundreds of dollars each year.
5 Lower your credit card interest rates
As stated above the lower your interest rates the more money you save. Lowering your credit card interest rates could save you hundreds if not thousands of dollars. Call your credit card company and request a lower rate. Many consumers are intimidated by the thought of requesting a lower rate. Dont be one of those consumers. Youd be surprised at the results. Your chances are good if you have been a customer for some time you are not at your credit limit and you have been making timely payments.
Visit www.rebuildcreditscores.com/Lower_Your_Interest_Rates.htmlto view a short video on how easy itcan beto get yourcredit card interest rates lowered.
6 Never pay just the minimum payment due
Making minimum payments to your creditors will not lead you to financial freedom. It may even help you dig your way deeper into debt. Always pay as much as you can afford. Credit card companies compound interest daily. Any additional money toward your debt reduces the principal balance as well as the amount of interest you will pay over time.
7 Switch banks
Monthly bank and ATM fees can really add up. When using the ATM you may not think about the 2.00 or 3.00 charge for ATM withdrawals. But if you use the ATM a couple times a week not to mention if your spouse does the same thing ATM fees can be astronomical. Consider switching to a bank that does not charge ATM withdrawal fees. Many banks offer free checking and at most credit unions you can get free checking with interest with no minimum balance.
8Balance your check book and avoid overdraft fees
Not surprisingly many of us do not balance our checkbook. We feel the automated phone teller or online banking is enough to keep us informed about our finances. Its not. Good old fashion basic math skills can save you a lot of money. Bank overdraft fees can range from 22 to 35. Overdraft fees are through the roof and there is no sign of them decreasing. Balancing your checkbook whenever you transact business using your checking account i.e. writing checks ATM withdrawals bank service fees etc. will save you money in the long run.
9 Earn extra income
Are you due for a raise? Negotiate a good raise if you are due for one and save that extra money. If a raise is not in the cards take on an extra job. Extra income can be earned by taking on a weekend or parttime job. With the Internet many opportunities exist for homebased businesses without much startup costs. Take a look at 25 business ideasto start those creative juices flowing. With todays unstable economy it is wise to have multiple streams of income. For more tips on eliminating debt visit: www.rebuildcreditscores.com/Eliminate_Your_Debt.html
About the writer:nbsp;nbsp;Lisa Phillips is a marketing consultant specializing in business expansion and development. Because many small business owners lack the personal and business credit necessary to grow and expand she has developed a free website to aid consumers as well as entrepreneurs in rebuilding and taking control of their credit.
www.rebuildcreditscores.com
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