Managing Debt- Debt Free in Ten Years

Debt is a subject that is close to everyone’s heart these days. There is not one day that the news is not focused on some sort of problem associated with debt. Now I would like to focus on how to manage household debt and to pay off your debt in ten years. Wow, how nice it will be when you can get your paycheck and know that you have enough to live on until the next payday, to know that you will not have to struggle to pay all your bills. Now let’s get started on how we are going to achieve this goal.

First we have to start with making a budget. In order to get the budget that is right for you I want you to keep a record for two weeks of every penny you spend. This will help you to see where your money is going. After we see where your money is going we can decide how to budget for gas, food, entertainment, and eating out. Your bills will be the easiest part of the budget to plan because they are reoccurring so we can look back over the last year and average out the bills that are not the same every month.

Back to your spending habits there are ways you can still have some family fun without spending much money. For instance you can rent movies for free from the public library. This will save you money on your entertainment budget. You can clip coupons for items that you use to save money on your grocery budget. Start a family game night and play boards games with your children this will be fun and save you money.

If you will take your lunch three days a week you can save about $96 a month on your budget. At the grocery store buy the larger sizes of Chicken, hamburger, & pork chops the price by the pound is better on the larger sizes and you can separate out into serving sizes for your family and then freeze. One other way to save some money is to buy the store brands instead of the name brands. In most cases you are only paying extra for the name on the label.

Now that we have come up with ways to cut your spending let’s talk about savings. You should have at least three (3) months salary in a savings account for emergencies at all times. You need to either start a savings account or start to contribute to your current saving until you reach your goal of three (3) months salary. You might be sayings where am I going to come up with extra money to save. You are going to find it by using the ideas previously mentioned to save money. You will also start coming up with your own ways to add to your savings plan.
The third thing we need to do is look at your credit card debt. We need to see how to budget so that you can get your credit cards paid off in the next two years. Our over debt free goal is ten years but the goal for the cards is two years. If your credit card debt is more than $5000 it may take longer than the two year goal.

The next thing that needs to be addressed is car payments. If you have car payments then let’s come up with a plan to add additional principal to your payments. Another goal would be to start additional savings for maintenance and for a replacement car to keep from having to go in debt again for a vehicle. You should also think about the depreciation of a car before you decide to buy another car. It is a lot cheaper to purchase a late model used car that is in good condition then to have to go into debt for the next 5 years for a vehicle that you may not be able to afford.