| Long Term Plan to Pay Off Bills |
| By Credit Federal |
Published
01/26/2008
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Debt Help
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Pay Off Bills and be Debt Free with a Long Term Plan
You cannot achieve a goal unless you first establish the desire and evaluate your ability to achieve the goal. If your goal is to pay off bills so you can be debt free, you need to find out what is causing you to be in debt in the first place, what's keeping you in debt, and what do you need to do; or change, to stop more debt from building up as well as how to get your debt paid off.
Sounds like a mouthful, right?
Actually the process can be very simple, and within reach in one year. Not only do you feel happier when you get debt under control, you also establish long term financial security for yourself and your family. That's something that will make you doubly happy when a financial emergency arises such as a temporary loss of income.
Let's get started:
1: Evaluate past mistakes - Quite likely, one major mistake was not having any type of financial plan to control debt and save for the future. Too often we think only of the here-and-now, to make-ends-meet. Your first step is to change this mindset.
2: Set realistic goals - Don't set your goals too high, nor for too short a time span. For example, don't make goals like "Save $10,000" in 30 days if you earn only $1,000 a week and you pay $3,000 a month in bills. Unless you win a lottery it's not likely to happen. Instead, the goal of saving $10,000 in one year; versus one month, is more realistic. (Use our savings calculator to see how much you can earn in interest over time)
Some goals to consider are:
Reduce bills by $100 per month starting next month
Payoff credit card balances in one year
Increase investments by an additional 5% within 3 months
Increase savings with an extra $5,000 by year's end
3: Money to pay bills - All your financial plans should revolve around the money you earn, not money you hope to win via a grant or lottery. Hence, not only do you need to wisely spend the money you make, you should also look for ways of increasing your income, either through pay raises or investments. Regardless of how much you earn or gain through investments, you need to control your expense-to-income ratio so you can pay all bills plus save and invest. To do that, you need to create a personal budget and to track expenses. By tracking expenses, you'll know if; and where, you can curb wasteful or unnecessary spending. When you were a child, you were probably afraid to ask your parent for money to buy a toy or candy, and you probably expected to get turned down. You can use that to your advantage, even today. Consider placing a photo of your mother, father or guardian on the OUTSIDE of your wallet or money clip. This may remind you that you need to be frugal. Use your imagination on how to help you say no to unnecessary or wasteful spending.
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