10 Steps to Financial Freedom
and Eliminating Debt
by Lisa Phillips
updated January 3, 2010
and Eliminating Debt
by Lisa Phillips
updated January 3, 2010
The current economic state of this country calls for some consumers to
begin examining their financial outlook and start making changes. It has
become more difficult to obtain credit, bank loans and mortgages. Now is
the time to plan wisely for the future and ensure your standard of living is
stable and continues to get better, not worse.
begin examining their financial outlook and start making changes. It has
become more difficult to obtain credit, bank loans and mortgages. Now is
the time to plan wisely for the future and ensure your standard of living is
stable and continues to get better, not worse.
1. Create a Budget
The first step to financial freedom is creating a budget you can stick with.
Budgeting can be simple when you start gradually. Making drastic
changes often leads to not sticking with the plan.
a. Begin with your fixed expenses. Fixed expenses are your household
necessities such as mortgage, rent, utilities, car payment and insurance.
b. Next, tackle your variable costs, Variable costs can change from month
to month such as groceries, cell phone, credit card bills, entertainment
and clothing.
c. Now, create a reserved budget. Reserved budget would be for things
like dining out, vacations, hair stylists, hair cuts and even pampering
needs. Be realistic and set reasonable constraints on these items.
Basically, you want to include everything you spend money on in your
budget. It helps you to see where your money is going and what you can
possibly cut back on. You may be surprised to see where your money is
going and how you can save by cutting out frivolous items.
2. Use Cash
Using cash instead of credit and even debit cards can help you save
money. Put your credit and debit cards away for a while and start using
cash. Using cash makes you more aware of your spending habits. Pulling
out a credit card may give you instant gratification but when you face the
bill along with interest charges that gratification is long gone. Carry one
primary credit card and use it only for emergencies only such as car or
home repairs.
Put your debit card away and you will instantly see how much money you
are really spending. Even though you have the cash in your checking
account, actually forking over cash when making purchases will open
your eyes to anything you really do not need and help you stay within
your budget.
3. Rebuild Your Credit Scores
The cost of having bad credit is immeasurable. If you are going to be
financially free you must improve your credit rating. It makes a huge
difference in the amount of money you save by having a good credit
score. The current credit crunch has made it imperative to improve your
credit scores and maintain good credit. Some consumers are finding it
very difficult to make major purchases such as cars and homes because
of their credit score.
In the not too distant past, low credit scores would not hinder a consumer
from purchasing major items such as a car. In today's economy many car
dealers are requiring a minimum credit score of 700 for credit applicants.
Despite the fact many banks benefited from the 2008 Bailout. Banks are
hoarding money and are hesitant to make mortgage, auto or personal
loans to consumers. Credit standards have changed and there are only
a few lenders that will deal with bad credit or subprime loans.
The bottom line is the better your credit score, the lower the interest rate
and low interest rates equal money saved. For instance, if you have a
$400,000 mortgage at a 6.00% (30-year fixed interest rate) your monthly
payment will be $2,398.20. That same $400,000 mortgage at a 9.00%
(30-year fixed interest rate) your monthly payment will be $3,218.49.
That’s a difference of $820.29 a month!
The same rules apply with automobile loans, credit cards and other types
of bank loans. The better your credit score, the lower your interest rates
and the more money you save. Take a look at a few tips to hep you
rebuild credit scores.
4. Revamp your Cable TV Services
Although it is not realistic for everyone to simply cancel cable, you can
save money on your cable services by limiting your premium channels
and not ordering pay-per-view movies. You can save money each month
by having just one premium channel instead of four.
I doubt you watch all those premimum movie channels any. Depending
on how much you pay for premium and pay-per-view channels, you will
save hundreds of dollars each year. Bundling your cable, telephone and
Internet services may also be a way to save money. Some of the major
service providers have great offers going on right now if you make the
switch.
Before you consider bundling your services make sure you do your
research of any and all fees involved and make sure the provider you
are researching has good service in your area. You do not want to wind
up switching back because your area does not have good reception or
Internet connections are poor.
NEXT: Create a Good Cushion CONTINUED 1 2 3 4
The first step to financial freedom is creating a budget you can stick with.
Budgeting can be simple when you start gradually. Making drastic
changes often leads to not sticking with the plan.
a. Begin with your fixed expenses. Fixed expenses are your household
necessities such as mortgage, rent, utilities, car payment and insurance.
b. Next, tackle your variable costs, Variable costs can change from month
to month such as groceries, cell phone, credit card bills, entertainment
and clothing.
c. Now, create a reserved budget. Reserved budget would be for things
like dining out, vacations, hair stylists, hair cuts and even pampering
needs. Be realistic and set reasonable constraints on these items.
Basically, you want to include everything you spend money on in your
budget. It helps you to see where your money is going and what you can
possibly cut back on. You may be surprised to see where your money is
going and how you can save by cutting out frivolous items.
2. Use Cash
Using cash instead of credit and even debit cards can help you save
money. Put your credit and debit cards away for a while and start using
cash. Using cash makes you more aware of your spending habits. Pulling
out a credit card may give you instant gratification but when you face the
bill along with interest charges that gratification is long gone. Carry one
primary credit card and use it only for emergencies only such as car or
home repairs.
Put your debit card away and you will instantly see how much money you
are really spending. Even though you have the cash in your checking
account, actually forking over cash when making purchases will open
your eyes to anything you really do not need and help you stay within
your budget.
3. Rebuild Your Credit Scores
The cost of having bad credit is immeasurable. If you are going to be
financially free you must improve your credit rating. It makes a huge
difference in the amount of money you save by having a good credit
score. The current credit crunch has made it imperative to improve your
credit scores and maintain good credit. Some consumers are finding it
very difficult to make major purchases such as cars and homes because
of their credit score.
In the not too distant past, low credit scores would not hinder a consumer
from purchasing major items such as a car. In today's economy many car
dealers are requiring a minimum credit score of 700 for credit applicants.
Despite the fact many banks benefited from the 2008 Bailout. Banks are
hoarding money and are hesitant to make mortgage, auto or personal
loans to consumers. Credit standards have changed and there are only
a few lenders that will deal with bad credit or subprime loans.
The bottom line is the better your credit score, the lower the interest rate
and low interest rates equal money saved. For instance, if you have a
$400,000 mortgage at a 6.00% (30-year fixed interest rate) your monthly
payment will be $2,398.20. That same $400,000 mortgage at a 9.00%
(30-year fixed interest rate) your monthly payment will be $3,218.49.
That’s a difference of $820.29 a month!
The same rules apply with automobile loans, credit cards and other types
of bank loans. The better your credit score, the lower your interest rates
and the more money you save. Take a look at a few tips to hep you
rebuild credit scores.
4. Revamp your Cable TV Services
Although it is not realistic for everyone to simply cancel cable, you can
save money on your cable services by limiting your premium channels
and not ordering pay-per-view movies. You can save money each month
by having just one premium channel instead of four.
I doubt you watch all those premimum movie channels any. Depending
on how much you pay for premium and pay-per-view channels, you will
save hundreds of dollars each year. Bundling your cable, telephone and
Internet services may also be a way to save money. Some of the major
service providers have great offers going on right now if you make the
switch.
Before you consider bundling your services make sure you do your
research of any and all fees involved and make sure the provider you
are researching has good service in your area. You do not want to wind
up switching back because your area does not have good reception or
Internet connections are poor.
NEXT: Create a Good Cushion CONTINUED 1 2 3 4
| Copyright RebuildCreditScores 2010. All Rights Reserved |
Links
More Resources
Dispute Bad Credit
Tips for disputing negative information in
your credit files
Debt Validation
How to halt the collection process by
requesting a collection agency to validate
the debt
Collection Agencies
Information on effectively dealing with
collection agencies
Get Deletions
Request a deletion when paying negative
and collection accounts.
Tips for disputing negative information in
your credit files
Debt Validation
How to halt the collection process by
requesting a collection agency to validate
the debt
Collection Agencies
Information on effectively dealing with
collection agencies
Get Deletions
Request a deletion when paying negative
and collection accounts.
Consumers are not experiencing a
"mental recession" the prices food,
gas, and utilities are rising. Some
gradual changes in your money
management lifestyle can lead you
to debt elimination and financial
freedom.
A good plan you can stick with
without feeling deprived is more
likely to work out for you in the
long run. Here are a few steps to
begin changing your money
management lifestyle and
becoming financially free.
"mental recession" the prices food,
gas, and utilities are rising. Some
gradual changes in your money
management lifestyle can lead you
to debt elimination and financial
freedom.
A good plan you can stick with
without feeling deprived is more
likely to work out for you in the
long run. Here are a few steps to
begin changing your money
management lifestyle and
becoming financially free.
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