Step 1. The purpose of this first step is to bring you back to reality. You must know exactly how much money you owe and to whom you owe it. * Collect all of you unpaid bills and any other evidence of your outstanding debts.
* List each outstanding bill on
same sheet of paper. In separate columns, include invoice or account number, amount due, name of creditor, and date bill can be paid in full without incurring additional finance charges.
* Total amount due column.
* Total number of creditors.
* Total number of bills.
Are you surprised or shocked? Of course, most will be shocked by scope of their debt. Regardless of your reaction, you now (perhaps for first time) have an exact accounting of your current debts. Debt help Considers this to be your guide, because it shows exactly how much money you currently owe, and by what date you must pay.
Step 2. This step employs a powerful visualization technique that actually enables you to visualize an end to your current debts.
* Mentally consolidate your bills. Do not think of your debt as a series of separate bills. Consider all your bills as one large bill to be repaid. As you diligently repay each component bill, your large bill becomes smaller.
* Mentally consolidate your payments. Do not consider your individual payments towards separate bills, consider them one large payment towards your one large bill.
* Debt help shows why you must continue making same size payments regardless of how many bills are repaid. As bills are paid in full, more money is available to pay other bills, but only if your payments remain same.
* You must pay your bills in order of their higest monthly payments. This allows you to apply most amount of money to next bill and reduces your debts in shortest amount of time.
If your large bill becomes smaller each time you make a payment while size of your payments remains same, net result of this strategy is that each successive payment has a greater impact upon size of your debt.
Debt Example: Say you have two bills, one for $250 and one for $750. Together they total $1000. You can afford to pay $500 per month. If you pay $250 towards each bill, small bill will disappear after first payment and larger bill is reduced to $500. You still have $500 available for next payment. If you maintain same size payment, you will completely eliminate remaining bill with next payment.
Step 3. Now it is time for a course correction - you must alter your spending habits. Regardless of cause, be it problem debt or chronic debt, you must be willing to change your spending habits and if necessary, seriously alter your lifestyle.
* Establish your long-term financial goals. It took months or years to reach your current level of debt. Since you cannot wish yourself out of debt nor can you count on winning lottery, you must adopt, reasonable financial goals. The more you pratice meeting even limited financial goals. The more confident and in control of your life you will feel. This in turn enables you to meet longer-term goals successfully.
* Establish credible short-term goals. Short-term means tomorrow! Durning next 24 hours you are not to incur any new debt.
* just get through one day, then another. You get idea. The impact of this - trail by fire - is to immediately boost your confidence by preventing your debt from expanding. This prepares you for serious commitment to complete debt reduction ahead of you.
* Establish realistic intermediate term goals. These goals should find you becoming comfortable with basics of debt reduction. Your goals are to implement plan, grow more confident as you watch your debts grow smaller and begin to realize that you can become debt free.
