Unfortunately, it’s also one of the most broken resolutions too. However, 2014 is going to be different. This year you’re going to keep the promise you make to get out of debt. Here are five tips to help you succeed in the next 12 months.
1. Improve Your Credit
This step actually takes several sub-steps to complete. First you want to start cleaning up your credit. Order a credit report. You may find some adverse information that is lowering your credit score. Next, fix the bad credit listed on your report.
For instance, dispute any negative information that isn’t true such as late payments. If you want to repay creditors listed on your credit report, make sure the debt isn’t considered zombie debts. Zombie debts are too old for creditors to sue you for or even contact you about because of statute of limitations. If you contact the creditor about the debt you start the statute of limitations over again.
2. Open or Use Your Savings Account
You want to open or use your savings account. The account is a way to save money. For instance, you can build an emergency fund using the account. You can choose to have a debit card or limit the access to it by not having one.
3. Reduce Your Dependence on Credit Cards
You may not think you’re dependent on credit cards, but you may be when continuously reach for plastic instead of cash. You take a huge financial risk by continuously charging your balance near or to the maximum of your credit line. You should always leave some available credit on each of your cards. This way you protect your credit score and reduce our debt. Remember, pay your bills on time and put the plastic away.
4. Pay Yourself First
You may think that this isn’t the way to become debt free in 2014, but it is. It’s easier to go into debt when you’re constantly spending money.
For instance, you want to go to the movies or out to dinner with friends. You don’t have the money so you charge it to one of your credit cards. If you pay yourself first, you can have money to do the things you want to do. More importantly, you don’t incur new debts. Go ahead and pay yourself. After all, you’re the one working hard to achieve your dreams. The easiest way to pay yourself is by having a separate savings account. If you have direct deposit, you can have a small amount transferred into that account.
5. Live Within Your Means
We all want things that we can’t have. For example, you may want that flat screen television. However, you can’t afford it. The debt-free thing to do is to save up for it or not buy it. Living within your means requires making big changes like:
- Secure a low APR% on car loans in cities like Las Vegas and Salt Lake City.
- Stop using savings or credit cards for items you really can’t afford.
- Make a monthly budget based on your income.
- Track your spending.
- Pay bills on time.
If you continue to live beyond your means, max out your credit cards or ignore errors on your credit report, you could end up owing more money. That’s why becoming debt free in 2014 will take hard work. If you have the commitment and the motivation to become debt free, you’ll definitely succeed. The five tips will help you move in the right direction.