Financial Planning

This is a topic that appeals to everyone and fortunately, it is not as difficult as many people would think. The real key to getting out of debt is making the money that you have paying bills work more effectively. Realizing that there is only so much to go around, there has to be a way to get those balances down and somehow get out from under that gray financial cloud that is following you right now.

The first step is to establish a budget. This will not take long, but you have to be honest with yourself if you are going to make this work. People will often find that the reason that they are living from check to check is because of a lot of wasteful spending. While we want that spending cut out, we also want to put that money to good use.

Saving money is important, but many times having a savings account is counterproductive when you are trying to get out of debt. This is not to recommend that you do not have money put away in case of emergencies, quite the opposite. However, once that fund is established, continuing to sock money away at a whopping .003 interest rate serves no purpose. Not when you are getting charged 27 percent on your cards. Even if you were only saving $100 a month, that would do directly against principal.

We briefly mentioned the wasted money above. If you were already spending that money, you will never miss it. Again, we get back to the high interest rate credit cards. If you were spending $80 a month on Starbucks and are now making your own coffee, that will leave at least $70 a month that can be put to use. If that goes to the credit card along with the $100 that you were putting into a savings account at almost no interest, your debt load will start to drop enormously.

Of course there is a lot more about getting out of debt than these two tips and we plan on covering them all. Baby steps are important in getting pointed in the right direction though. We have a few more ideas that can be used right away and then once they are all in place, it is time to start actually putting your money to work to help you achieve financial independence.