ABCs of getting out of debt.

A is for Analyse your current monthly outlay, what can be reduced in terms of your utilities. Maybe you can set the thermostat to 77 instead of 75 in the summer, and 68 instead of 72 in the winter. Cancel HBO, Showtime, Cinemax, Stars and ditch the digital box – do you really have time to watch all those extra channels? If you like movies at home, consider Blockbuster Online – 3 movies out at any one time, you can return either free in the mail, or drop it off in the store for a new movie without waiting, all for under $20.00 a mth. (Free trial available). Best of all, you get to watch what you want, rather than having to watch what’s on.

 B is for Budget. Yes, its a dirty word, like “Diet” – but unless you have a plan to discipline your spending, you’ll be paying the finance companies for the privilege of using their money. MSN have a simple budget you can get straight into.

C is for Consolidate. When possible move your High APR balances to a single payment, lower apr loan. Look out for transfer fees, sometimes 3% no cap on balance transfers, be sure to find out what can change your APR, such as universal default, returned checks, late payments. And make sure there are no pre-payment penalties so you can pay it back faster. Don’t forget to talk to your bank, especially if you’ve been a good customer of theirs – they may be able to come up with an unsecured loan to pay of some of your higher APR cards.

D is for Discipline. You have to be serious about getting yourself out of this hole. That means STOP DIGGING! Being on a reduced spending budget is a lifestyle change, instead of splurging to make yourself feel better, budget to reward yourself for keeping on track.

E is for Emergency Fund. Life happens. Car trouble, equipment failures, medical expenses can come out of nowhere. If you don’t have a fund to cover these eventualities, you’ll be forced to finance them, which, seeing as we’re trying to get out of debt is going to be a serious setback.

F is for Fees, late Fees, payment by phone fees, ATM withdrawal fees are all fees that can be avoided with some planning. Otherwise these will nickel and dime you to death.

G is for Goals. Like any diet, keep in mind what being debt-free will do for you. Build into your budget saving for some fun stuff, but keep the big dreams for after you’ve escaped. Imagine what all of those payments you make each month on your debt could buy each year if you put it in a savings account, a dream trip to the Bahamas, Hawaii, Florida, Europe maybe? A sexy new Computer, or Big Screen TV. Find your motivation, and set a goal to make it happen.

H is for H.A.L.T. – When you’re Hungry, Angry, Lonely or Tired. Stop DON’T Shop. The little high you’ll get will be far outweighed by the guilt. Being broke isn’t fun, being in Debt and Broke is far worse and the only way to stop being either is by planning and by being responsible with your financial means.

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~ by creditcardboffin on June 13, 2007.

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