Debt Free by 2013

Guest Post by Katie Malcolm 

Being in debt is upsetting. You know that all you need to get rid of debt is a little extra money, but that extra cash is sure hard to come by. However, with a little initiative and a lot of motivation, being debt-free is certainly an obtainable goal. Here are five simple ways you can combat debt in 12 months or less.

Cut Up Your Credit Cards

The first step toward becoming debt-free is making a firm decision to spend your money differently. Study your current accounts and pick one credit card to use only in an emergency situation. Cut up all of the rest of your cards.
Don't close any of your credit card accounts, however. Closing an account lowers your debt-to-available-credit ratio and reduces the length of your credit history. Both of those factors will lower your credit score and you want to be a debt-free person with great credit. Just in case.

Find Small Ways to Save

Look at all of your current accounts and find small ways to save. Do you really need premium cable? You can always watch your shows for free on the TV channel's website. Ditch your Smart Phone and buy a simple prepaid cell phone that costs you $20 a month or less.
Cut out all of the small luxuries, like having rental movies mailed directly to your home and unused gym memberships. Every little bit you can save each month will quickly add up to a debt-free life.

Reduce Larger Monthly Payments

Lower your car bills by selling the vehicle you're making payments on and buying a reliable used car. While it might not look as nice as a new vehicle, it should still get you where you need to go. Shop around for cheaper car insurance as well. If you don't owe anything on your car, consider getting just the minimum insurance required by your state.
If you're renting a place to live, try haggling with your landlord to bring down your monthly payment. If this doesn't work, look for another place with lower rent. If you own a home, consider moving to a smaller house to lower your monthly mortgage payments. This might sound drastic, but you have to take some drastic measures to combat debt within 12 months.

Pay Off Debts

Now, take all of the money you saved by cutting back on expenses and throw it at your debts. Make a list of how much you owe on each of your current accounts. Start paying off your smallest loan or credit card debt first. Send in at least double the amount of the required monthly payment for the fastest results.
Once you pay off the first debt, start paying on your next smallest debt. This time, make at least the minimum monthly payment along with the same amount of money you were sending to your first creditor. Continue this pattern until all of your debts are paid off.

Pay Your Bills Early

Pay your bills early to avoid accruing any interest. Paying early also prevents costly late fees from draining your savings. You can pay many bills online to make this process faster and easier.
Combating your debts and becoming debt-free is only half the battle. Staying debt-free is the other half. Play smart with your money. Never spend any money that you don't already have. If you decide that you really want to buy some non-essential item, and then save up for it instead of putting it on a credit card.




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