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Loading...10 Steps Toward Real Financial Freedom – Book Giveaway!
- Healthy Living Editors
- May 21, 2011
- 5:06 am
- 120 comments
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 don’t 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 “Saving Your Way Out of Debt.”
People get out of debt all the time. As with yo-yo dieting — when weight is lost, then regained — 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 it’s 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 don’t 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. It’s 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 can’t 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 — that’s right, the obligations and the fun stuff. Life happens. Surprises always crop up. Without savings, we resort to using credit cards. Then we’re 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
Read more: Conscious Consumer, Contests & Giveaways, Do Good, Family, Guidance, Inspiration, Life, Self-Help, Smart Shopping, book giveaway, debt, finances, money
Healthy Living Editors
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people are talking
This seems like an ad for CoQ10 to me.
It's a pity this article didn't address the possible reason for this terrible reputation compared to…
They look nice and are tasteful, but I don't think they'll go over too well since they're (mostly) p…
Very nice article! Thank You
Thank you.
120 comments
+ add your ownThanks for the tips!
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.
Ta.
I need a debt diet. please help!
Sounds like a good book and a smart plan! Thanks for sharing!
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!
very useful good article ....i like no.7
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.
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).
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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