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10 Steps Toward Real Financial Freedom – Book Giveaway!

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10 Steps Toward Real Financial Freedom – Book Giveaway!

We are giving away a copy of Financial Recovery: Developing a Healthy Relationship with Money by Karen McCall. Check out this article from the author and donít forget to leave a comment for your chance to win the book!

Saving Your Way Out of Debt: 10 Steps Toward Real Financial Freedom
By Karen McCall

Imagine how it would feel to have no worries about debt. There is a simple but powerful way to get out, and stay out, of debt. I call this strategy ďSaving Your Way Out of Debt.Ē

People get out of debt all the time. As with yo-yo dieting ó when weight is lost, then regained ó people often pay off debt, and then old habits resume and they find themselves carrying a heavier debt load than ever. The real challenge is staying out of debt. You probably spent your way into debt. Now itís time to save your way out of debt.

Step 1. Avoid Deprivation Mode

People assume that they must cut out everything that is fun or pleasurable until their debt is paid off. Leaving essential emotional and physical needs unmet sends us into deprivation mode. Deprivation often leads to overspending. Overspending often leads to more debt. Identifying your essential needs and building a spending plan that meets them (even in simple ways that donít involve spending money) is vital during the process of eliminating debt.

Step 2. Stop the Leaks by Stabilizing Debt

Prematurely paying down debt while still using credit cards keeps you stuck in the debt cycle. This is like sitting in a boat with a grapefruit-sized hole in the side and bailing out the gushing water with a thimble. The most foundational step to freeing yourself from the debt cycle is debt stabilization. Itís nearly impossible to stabilize your debt while you continue to use credit cards. Stabilizing debt simply means that you stop adding to it.

Step 3. Build a Firm Foundation with Periodic Savings

One common myth is that we canít begin saving until we are debt-free. In fact, saving right from the start is the key that will free you from the yo-yo of the debt cycle. Start by building periodic savings. This is money available to meet periodic, non-monthly expenses, such as car insurance, taxes, and family vacations ó thatís right, the obligations and the fun stuff. Life happens. Surprises always crop up. Without savings, we resort to using credit cards. Then weíre back in the leaky boat, bailing away.

How do you save when money is already tight?

  • Make minimum payments on all but one targeted debt.
  • Reduce optional spending for now.
  • Look for creative ways to bring in more money.

Saving your way out of debt may seem slow at first, but eliminating debt forever will pay for itself a thousand times during the course of your lifetime.

Step 4. Use Periodic Savings Guilt-Free!

Most of us feel that savings are not to be touched. Periodic savings are meant to be used, guilt-free, to pay for periodic expenses rather than charging them.

Next: steps 5-10

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120 comments

+ add your own
2:04PM PDT on Apr 23, 2012

Thanks for the tips!

3:38PM PDT on Apr 22, 2012

Getting out of debt is a great thing. I limit my monthly spending but I want and need some small pleasures but I control the amount I spend. Jobs are scarce in my area and I can not afford a car so my search for work is limited. Working hard to save. Thanks for this info.

8:30PM PDT on Jun 29, 2011

Ta.

6:46AM PDT on Jun 18, 2011

I need a debt diet. please help!

9:24AM PDT on Jun 1, 2011

Sounds like a good book and a smart plan! Thanks for sharing!

12:12PM PDT on May 30, 2011

Debt's an awful thing. Hope the younger folks are paying attention. I think a good rule is to avoid it at all costs and pay cash for everything. I mean everything... except emergency medical stuff. Other than that, everything.

It's like losing weight, burn more calories than you take in...

Bring in more money then you spend. Voila!...

But what do I know? I'm tryna get the book!

8:55AM PDT on May 29, 2011

very useful good article ....i like no.7

3:24PM PDT on May 27, 2011

I enjoyed the article, it has taken me until age 50 years to finally be free of all debt. It was a hard path to follow but it feels good know and I am hoping to retire early as a result.

12:23PM PDT on May 27, 2011

Appreciate the advice. I've read many columns, websites, etc. on how to reduce my debt but this column had more information (and more useful information).

10:34AM PDT on May 27, 2011

I really need to remember this: "...going slowly in the right direction is enormously better than going in the wrong direction at any speed."
I like that comment a lot!!
Thanks!

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Disclaimer: The views expressed above are solely those of the author and may not reflect those of
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