One of the most popular New Year’s resolutions is to set a goal for getting out of debt. Sadly, it’s also one of the hardest to achieve. Not because it takes any special training or techniques. But because it usually takes a person many years to get deep into debt – and it will take a lot of time to get out, too.
But there are some very simply ways to improve your chances of making it work in 2011. Most importantly, if you come up with an actual plan to make your resolution come true, you’ll be way ahead of most people. You won’t get out of debt just by hoping it will happen. Or just by working a little harder at it.
If you follow these 3 tips, you’ll be much more likely to be able to cross “getting out of debt” off your wish list for 2011:
1) Attack smallest debt first, so you “see” results.
There’s nothing less motivating than having a goal and not seeing any progress. That’s why it is so important to work on paying off your smallest debt first. Commonly known as the “debt snowball” method the idea is to pay off your smallest
debt first, then when that is paid off take the money you were using for that debt and add it to the next biggest debt. And your payoff will start to grow much like a snowball or bottom of a snowman. The motivation from paying off the first debt should keep you going, even when New Year’s Day is long gone and your resolution long forgotten.
2) Write down a series of goals you can actually reach.
If you’re struggling with money it’s easy to think “I don’t need to write down my goals, I know money is tight and my credit card bills are a constant reminder.” But that’s the negative way to look at it. The positive way is to write down your goals and put them in a place you can see on a regular basis. And when you reach a goal – no matter how small – cross it off so you can feel yourself being successful. So that’s why it is critical to break down your goal into small steps (such as making each of your monthly payments, or paying down your debts in $500 or $1,000 increments, anything that is meaningful to you). And make sure you write down each and every step. The more goals you cross off the list, the more likely you will be to reach the big one at the end!
3) You MUST find ways to spend less & earn more.
Take out your bank or credit card statements and look for as many expenses as you can to eliminate – eating out, buying stuff you don’t really need, buying stuff you really can’t afford, monthly subscriptions you can live without, lesser cell phone or cable TV plans – you get the idea. And look for ways to make extra money too – get a part-time job, sell stuff you don’t use, have a tag sale, start a simple home business like lawn cutting or house sitting or pet walking. Be creative!
If you follow these steps, your chances of making your debt reduction plan work are much better. But make sure to give yourself a “pep talk” every once in a while to keep yourself focused. Share your goal with a friend or family member who will support you during your tough times. An remember to reward yourself once in a while – not with a large screen TV or cruise – but maybe lunch out with a friend you don’t see that often, or an inexpensive piece of clothing to make yourself feel better.
So don’t forget to have some fun while you are working on your serious goals!
If you need more help with your credit card debt, check out Debt-Tips.com. You’ll find lots of strategies for getting out of debt and tips on various debt relief programs that can help you fix your financial problems.