Take this "3-step" life preserver and use
it... and don't feel like you're alone
If you ever wanted to get financially ahead, if
you've ever had an argument in your home over money, if you ever
thought you were drowning in a sea of debt, take this "3-step"
life preserver and use it... and don't feel like you're alone in
a sinking boat.
In a recent site survey, 37% of the
respondents asked for more information on debt reduction to
break out of their credit nightmare. This article not only
consolidates many of the resources written at this site
concerning debt reduction, but offers link resources as well as
more new information not seen here before. Here the are the
three steps I see as necessary for debt reduction.
Step 1: Where Do You Stand Now?
The following two selections offer a good
indication as to where you fit into the debt hopper compared to
Knowing where you stand among your peers (or
"keeping up with the Jones's") may be what got you into debt in
the first place, but sometimes it helps to know your standing
for that extra motivational shove all of us need from time to
The first set of data represents the percent
of income used within various expense categories. Though this
article was written in 1999 and the figures have increased, the
percentages are just about the same. All Homes income
average in 1999 was $39,926.
Bureau of Labor Statistics Consumer Expenditure
Surveyformatted by Money Magazine (July 1999). The next
set of data to answer "Who borrows?" and "How much?" It is from
Money Magazine (July 1999, pg. 70) and displays the
average balance on that item in July 1999.
- Income Taxes...............8.1
- Soc. Sec...................7.1
- Health Care................4.5
- Wearing Apparel............5.2
- Gifts & Contributions......7.7
- All Other
- Credit Card......$2,811
- 1st Mortgage....$76,018
- Car Loan/Lease..$11,206
- Personal Loan....$13,657
- Student Loan....$11,887
Step 2: Budgeting
It all starts with a budget. In fact, Fellow
Guide Deborah Fowles in an excellent article called Budgeting:
The First Step in Financial Planning, argues:
"To those of you who think you know where your
money goes without keeping detailed records, I issue this
challenge: keep track of every cent you spend for one month. I
promise you'll be surprised and perhaps shocked by how much some
of your 'small' expenditures add up to."
I could not agree more. Finding occasionally
wasted $100's is easy. It's the consistent $10 or $20 dribble
that eventually drowns you because you never see it build into
the $100 bills. If you really want to reduce your debt,
making out and sticking to a budget is vital!
Step 3. Application
So now you know where you stand in the
debt-scheme of things and you have the greatest budget in the
world. How can you get out of debt?
I would start at the top of Topic Menu. There
you will not only find seven articles which constitute the
original premise of this site, but you will find the fastest way
I know of to get completely out of debt. Although not of my own
originality, they contain the same formula I have taught for
years and now have people coming back time after time saying,
"It's so simple and it works!"
But let's say you just want to reduce your
debt, or you need supplemental articles to implement the fast
debt elimination plan. At the above reference, Topic Menu, (and
just past the first seven debt elimination articles) is a
subtitle, Money Savers. The very first entry, Free
Money Ideas, is an index to 15 pages of money saving ideas
categorized by areas of your life (auto, bank, shopping, etc.).
Below Free Money Ideas are an additional 14 articles I
have written specifically on saving money in various facets of