From the time we graduate high school
up until the day we die, we are faced with the hassles of credit
from every direction. Many of us have gotten ourselves into debt
where they cannot pay on all the debts they have or they're barely
surviving by paying the minimum payment on their debts.
However, the biggest spenders are African
Americans. According to a report from the Consumer Federation of
America, the typical Black household holds less than one-quarter
the net wealth of the typical American Household - $15,500 vs. $71,700.
This wealth gap is much greater than the median income gap between
Black American households and all American households -- $27,900
vs. $40,800 in 1999. And these are the ones who have the most debt
and the most troubles paying off their debts by living beyond their
financial means.
I have devised a plan which can eliminate
your debt for good and help you earn wealth in only a two year time
period. I have worked in the business of debt collections for the
past five years and have seen some of the worst cases of debt across
this country. With the knowledge I've gained from the debtors, attorneys,
collection agencies, bankruptcy attorneys, credit bureaus, credit
counseling services and settlement companies. I have devised my
own fool proof get out of debt strategy which has been proven to
work by eliminating debt and gaining wealth. I know that it works
because it has worked for me and it will work for you to if you
follow my 10 step program.
Step 1
- Make a Promise to Yourself
You have to make
the commitment to get your finances in order for yourself and no
one else. If you're not ready to make a financial commitment to
yourself, or if you're only doing this because someone is forcing
you to do so, you will not be successful. When you are ready to
seriously make that commitment to get out of debt, start with step
two of my proven program.
Step 2
- Do the Math
First tally up
everything you owe. There is a difference between debts you have
like credit card debt and on-going expenses that are not debt like,
utilities, rent/mortgage, car note, insurance, etc. You must know
where you are at financially. You can't fix something you have not
yet examined.
Step 3
- Get Your Credit Score
Get your credit
scores from all three major credit bureaus, Experian, Trans Union
and Equifax. Look over all of them thoroughly to make sure there
are no mistakes. If you find any contact that credit bureau and
correct those mistakes. Also get rid of any old accounts with $0
balances.
Step 4
- Write Down Your Goals
Your first goal
you should jot down is to be debt free in two years. Second is to
start a savings account, emergency fund and a college fund. Third
should be to live exclusively on a cash basis in 4 years.
Step 5
- Start Living off 15% of Your Take Home Pay
This means you
must live on 15% of your take home pay 20% would be better but 15%
will do. For example if after paying bills you have $350 a month
that usually goes towards gas, groceries, clothing, pocket money
and savings. Take $50 of that money and put towards savings and
emergency fund. In order to get rid of your credit card debts you
must commit to the savings. After a few months of putting at least
$50 towards savings and emergency fund a month, you can start to
use this money instead of your credit cards for small purchases
when you run out of money. But if you take any money out of that
emergency fund you must pay it back with interest when you get your
next pay just like you are your own personal bank. Try using 15%
interest on whatever amount you take out of the savings.
Also call your creditors to make payment
arrangements with them. Check to see f there are any programs which
you can enroll yourself into to help your situation. But most important
you must bring your accounts up to date first. Some creditor will
tell you they will put you on a payment program for a certain amount
per month, but your days delinquent still continue to climb which
shows up on your credit bureau. You must make sure you bring your
accounts up to date first with your total amount due, then enroll
yourself on a payment plan or a hardship program and check your
statements every month. Your accounts must remain under 30 days
delinquent for it not to affect your credit bureau reporting.
Step 6
- Find Avenues for Extra Income
Find avenues to
cut costs. For example start packing your lunches or parking in
free spaces or park and rides and walk to work. Have a garage sale
to get rid of things you don't use and don't need which can earn
you extra money and get rid of clutter. Also try an at home business
where you can make extra money in your free time at home. But be
cautious about the at home business because some are scams. Or pick
up a part time or weekend job to earn extra income. However the
most effective is starting your own small business, this is how
you control your own income.
Step 7
- Devise a Savings Plan
Once you're bills
are down to a reasonable level and you can pay them on time. And
your living off 20% of what you bring in, and making a little bit
of money on the side. Review your plan, 30% in living costs, 30%
in emergency fund, savings and college fund, 40% debt and expenses.
This is actually better with a two person income because one persons
check could go towards these expenses and the other individuals
check could be the non bill paying "freedom" check.
Step 8
- Investing
Now its time to
invest your money. Income does not get rid of debt wealth does.
Wealth is assets or things or worth, things that overtime gains
worth. Assets get more valuable overtime until they are more valuable
than your debt. At that time is when you are totally out of debt.
A few good places to invest are stocks in your own business, retirement
and your mortgage.
Step 9
- Finally Getting Rid of Your Debt
Now you can start
putting more money towards your debt. Start to pay off the smallest
debt first. Then use that payment once that account is paid in full
to start paying off the next highest bill. This way you won't be
paying anymore and your payments will consistently stay the same
but your debt will disappear.
Step 10
- Using Your Credit
If at all possible,
use cash whenever you can. But if not and you need to use credit
for an emergency or even for convinces then you may do so but pay
it off in full the following month. This way you will avoid the
high finance charges that the banks charge.
If you follow this 10 step program I
can guarantee you will be debt free within the next two years.
Here are also a few sites to assist you
with your debt management
Debit Tips
The Investment
FAQ
|