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How To Become Debt Free?

How To Become Debt FreeDo you want to become debt free? It is possible to become debt free! Know your debt score! Know what your debt level is right now. Write down your debt balances and minimum monthly payment per debt.

Update your list every month. Analyze your behavior. What are the reasons that you are in debt?  What is your situation exactly? What happened?

Do you buy everything you want without thinking if you really need it or not? Use a monthly budget to plan your expenses. By using a budget you managed your money. You are then free to spend the money where you are allowed to spend your money.

Write down your payment goal per debt in your budget. Make a budget for the following categories: necessities, food, financial freedom account, paying off debts, education, contingencies and other monthly expenses. Keep the commitments with yourself.

With a budget you plan how you are going to spend your income. Buy things you need instead of things you want.  At the end of the month compare your actual spendings with the budget. Make new commitments for the next month and commit to the new choices in the next month.

On your path to become debt free it’s important to keep putting 10% of your income in your financial freedom account. When you only focus to pay off your debt, you are focusing on the short run and you will never be financially free.

Combine the 10% monthly transfer to your financial freedom account and pay off your debt. If you are short on money, seek new ways to make extra income.

Make a debt reduction plan

Learn the strategies to pay off your debt. Be in control of your life instead of letting the debts be in control of you. To pay off your debts you have to make a plan for reducing your debts. Pay the minimum monthly payments for all debts. Additionally pay an extra amount for the smallest debt.

Pay off your smallest debt balance first. By paying off the smallest debt first you will see your progress faster. After the first smallest debt is pay off you will pay off the second smallest debt.

In the process of paying off your debt do not add new debts. Pay the minimum amounts of all debt. It keeps your debt from growing. By paying only the minimum payment you will not make any progress in paying of your debt. Pay all your bills on time every month. Do not accumulate your debts.

Analyze how you can gain some extra money by decreasing expenses and also how you can create extra income to pay off your debt. If you use a credit card and your credit card is fully paid off, pay off the new purchases every month. You will never have a credit card balance.

Most people are in debt to buy house, car and other things. The quality of life improve. At the other hand your financial future will be more difficult with the high level of debts. Due the highest interest rates you pay far more than the cost. Addionally you are paying for something you have already used.

It’s much better to transfer 10% of your monthly income to your financial freedom account. Use the money only for investments. Acquire assets and use the passive income from the assets to pay for your lifestyle.

Analyze also where you can save some money. Do a low budget hobby or a hobby that involves no money. Afford only what you can spend.

For your financial success!

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