Get Organized, Get Energized, Get Out Of Debt

The following post was written by NCN of No Credit Needed, one of my favorite personal finance blogs and probably the best blog on the topic of getting out of debt. If you're struggling with debt in any way, I highly recommend you check out No Credit Needed.

I've been debt free for more than a year, and I can promise you, living debt-free feels awesome.  Here's my super-simple strategy for reducing debt and living debt-free.

Get Organized

Your 'system' of organization will be unique, built for your own particular personality, but it needs include the following information:

• A list of creditors. You will also need account specific contact information, current balances, interest rates, minimum payments, and due dates.

• A plan for debt reduction.  How much “extra” can you afford each month?  Which account will you focus on first?  Will you prioritize the accounts to be paid off by balance, interest rate, or account type? 

• A budget.  You can build an incredibly elaborate budget or a simple “to save, to spend, to give” budget, but you need to have a concrete idea of how much money you will have each month for debt reduction.

• A filing system.  You need to be able to access important documents, both off-line and on-line.  Whether you use a shoe box, a filing cabinet, or a safe, you need to be able to put your hands on your financial documents.

Get Energized

Now that you have your 'system' in place, you need to get pumped up!  I suggest creating a list of reasons for getting out of debt:

• I hate paying interest.
• I like owning my stuff.
• I want to deal with less paperwork each month.
• I can't wait to send that last check so that I can scream, “I'm DEBT FREE!”.
• I want my spouse to be okay if something were to happen to me.

We all have our own, unique reasons for wanting to get out of debt.  Whatever YOUR reasons are, write those reasons down, refer to those reasons often, and remember those reasons whenever you get discouraged.  May I also suggest that you share your reasons with a close friend, someone who can hold you accountable?

Get Out Of Debt

You are now organized and energize, so go out and EXECUTE.  You have the system, you have a plan, you have a budget, and you have the will to succeed.

• Pay all of you bills, early and on-time. 
• Focus, each month, on paying down as much debt as you can. 
• Keep it fun. 
• Celebrate every single dollar of debt reduction.
• Surround yourself with people who will encourage, instead of discourage, your progress.
• Focus on creating a brand new lifestyle. 
• You are not the 'sum of your possessions'. 
• Stop buying things you don't need.
• Start thinking about each and every purchase.
• Talk to your spouse about money.
• Refuse to fight about money!

I love being debt-free, and I strongly encourage you to get out of debt, stay out of debt, and learn as much as you can about managing your personal finances.  FMF is one of my FAVORITE sites.  I learn something every single time I stop by.  Thanks for letting me write a “guest article”.

Comments

[bk]

If this guy had a single original thought and didn’t plagiarize verbatim from Dave Ramsey maybe I wouldn't have just puked in my mouth.

[db]

@bk:

That was unnecessary. Perhaps what NCN so brilliantly shows us is yes, it really is that simple. No need to make this harder tan it is to appeal to those who think everybody needs to bring something "original" to the table.

I'd rather read NCN in all his brevity than almost any other blog out there. He keeps it real.

DB

[Matt]

Just a thought on budgeting. In my experience, the best budgets are the simplest ones.

For me, the main leak in my finances was walking-around money. My wife and I would just go around, buying whatever we figured we "needed" on Visa check cards. We would try to be careful and thrifty, but we were still spending too much money each week. We weren't forced to make enough hard decisions and tradeoffs with our purchases. We didn't have a very keen understanding of the value of a dollar.

The solution was to switch to cash for all ordinary and semi-discretionary weekly expenses such as groceries, diapers, lunches out, dinners out (if any), lattes, magazines, etc. We each get a set amount of cash each week for those things. When it's gone, we have to wait till next week.

For expenses that we don't have as much control over (especially automotive, but also utilities, rent, etc.) we just pay them as needed, as before.

It's made our finances much more stable and predictable, and finally gotten us spending less than we earn.

[dazlette]

Loved the article. I went thru FPU- (Ramsey) and this article helped me to refocus. Its so easy to drift and costly too! I found the neatest thing yesterday. I belong to a healthy food and household product Coop. I have to drive 20 mins freeway to pick up the wholesale organic goods I use- its a monthly pick up.. Well Amazon emailed me and offered this incredible program with 15% off caselots of 7th generation products and free shipping and auto ship with free S&H. I did the math and the savings are significant over my Coop.. So the laundry soap, dishwashing soap and electric dish soap and some organic coffee will arrive monthly or every other month. It will keep me out of stores and I wont run out of these brand specific items I use. I will put that info in budget and track it on the calendar. Oh how sweet! Organization- a PLAN- is half the battle! Love that Amazon! By the way I love your site,too. Praise the Lord! Daz-Debt free except for the 56k mortgage