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The
Debt Diet - Do It Yourself
Many times living paycheck to paycheck and having little
savings is the result of poor budgeting combined with poor judgment
in managing your use of credit. To sum it up, you have everything financed
on high interest rates credit cards and have very little cash in reserve. The good news
is that if you are willing to admit that you spend more than you make
and are dedicated to making serious everyday changes then you can become
debt free doing it yourself, without much professional help.
Please note: we are not offering legal, tax or any other
advice here. We suggest that all visitors of this website seek professional
counsel before making financial decisions. What we offer here is information
to help you decide which debt relief approach may be right for you.
Only one person is responsible for creating the debt and for getting
rid of it. - YOU.
Do It Yourself Debt Diet.
There is a concept known as the debt pay down strategy.
It's very easy to understand and a logical process to pay off ones
debts. Businesses have done this for years. Simply put, you determine
which are your most expensive, highest interest rate debts and increase
your payments on those debts each month. At the same time you only
make minimum payments on your other debts. In addition, you stop spending
on unnecessary items! When the most expensive debt is paid off, you
now apply EVERYTHING that you were paying to that debt to your second
most expensive debt. In other words you have doubled your payments to the second debt. Continue until debt number 2 is paid off and again,
take the TOTAL amount you were paying to debt two and pay it on top
of your minimum payment of debt 3. Get the idea? Now you are paying about 3 times the minimum amount due. Continue this process
until all of your debts are paid off.
Then take the next step.. take
the money you were paying towards your debts and start saving it in a secure
interest baring account. Now you are the one earning interest, NOT PAYING
IT! In addition to saving and investing you should look to build a safety net to fight against any unforeseen event that could cause financial trouble. This involves investing in insurance products to protect against health expenses, accidents, lawsuits and one day your departure from this beautiful place. With the proper insurance strategy you will minimize the possibility of having a catastrophic event put you or your family into financial distress.
Here is a quick guide on the steps you should take to
get started with a Do It Yourself program (DIY). We also recommend that you purchase books on the debt
pay down strategy that go into greater detail.
Step 1: ASSESMENT
- Assess your total debt and your total
monthly minimum payments to your debts.
- Assess your total monthly living expenses. These are all
of your basic necessities, such as housing, auto, utilities, insurance
and food.
- Assess your total monthly expendable income. This is
all the money that you have earned in a month after you paid taxes.
- Add your total monthly expenses together
Subtract your
total monthly net earnings.
- The difference is what we will call your operating
cash. Operating cash is money you can apply to anything you wish.
It is our suggestion you use it to pay down your most expensive debts,
usually credit card debts.
Step 2: Define which debts to pay off first.
Now review your credit card bills and other loans you
pay interest on.
List each one on a peace of paper, or using a computer spreadsheet,
from the highest interest rate, down to the lowest interest rate. If
you have cash advances on your credit cards, then you may want to separate
those out on their own line as well. Do not worry about the highest BALANCE, the first debt should be the highest interest rate.
Now that you have them listed you know which debt is
hurting you the most.
Take all your operating cash, the extra money you have at the end of
each month and use it to pay more than your minimum payment on that
highest debt. Even it is only $20 more DO IT. Pay the minimum balance
on all other debts.
Step 3: Set a Debt Free Date!
By looking at your total debt
and how much you are able to pay each month you can determine about
how long it will take to pay off all of your debts. Determine this
date and post it somewhere prominently where you will see it every day, on you office wall,
computer screen, or on the frame of your family picture! You need to remember every day
that this debt WILL be paid, it's simply a matter of time and determination.
Step 4: Put in place the proper security net.
When you have reached that glorious day of being
free of debt you will be ready to take on the next phase.
Protect
and grow. Use the operating cash, ALL the money you were
paying towards your debts and direct it to an investment account.
A simple savings account will do, but you should seek out a low risk
investment account such as a money market account at a major investment
company such as Fidelity or Schwab. Please consult a professional
before making any investment decisions. Pay yourself every month
with a deposit into your investment account. THIS IS A BILL, PAYABLE
TO YOU!
Next have a professional review your insurance needs.
Health, Life, Dental, Auto and home or renters insurance look at it
all. One of the fastest and saddest ways people lose their homes, current
income and retirement savings is by having a tragedy strike and having
no insurance or being under insured. We know, it seems like the insurance
companies are making money hand over fist, but you need it, do NOT
go un-insured or you risk going from first to worst in a day.
Finally work with professionals in the areas of insurance,
investing and accounting to give you guidance yearly. The money you
spend on their services is well worth the investment - Your happiness and security.
Good luck to you, and please come back and tell us
how you do.
The Debt Diet.com will put you in touch with a Debt Relief Professional
who can quickly assess your situation and provide realistic solutions.
Complete the form below or call us now at: 1-888-653-5569 to talk to a debt relief pro who can answer
your questions and give you a realistic plan to become debt free on
your budget.
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