ICFE eNEWS #14-11 - June 10th 2014
10 Tips For Dumping Debt
Choose to live differently. I like
Dave Ramsey's philosophy: "Live like you must live now, so
you can live like you want to live later." Dumping debt
begins with a determined attitude which then compels us to
Stop creating debt. Stop using your
credit cards, stop borrowing, and live within your means.
Spend less than you make. If you are
running out of money before you run out of month, you are
spending more than you make. Click here to download my "Debt
Doctor Budget Sheet" to help you decide how much and where
to reduce your spending.
Avoid going into debt to pay off
debt. Borrowing to pay off debt requires no change in your
spending habits and therefore, does not produce long-lasting
results. It is similar to digging a hole in your front yard
to fill in a hole in your back yard.
"Snowball" your debt payments. List
all your monthly payments and keep paying at least that
minimum on each debt. Soon you will be paying more than is
required, and the extra amount will be placed on the
principal. As one debt is paid off, transfer that payment to
another debt, until eventually you are making payments on
only the final few debts. These payments will be much larger
than the minimum required, with the extra going to
principal. Some people prefer to pay off the smaller debts
first, others will pay first the ones with the highest
Fund an emergency savings account.
Quickly acquire $1000 in an emergency savings account, and
fund it each paycheck with an automatic payroll deduction.
After acquiring $1000 in the account, then shoot for three
months income in the account, then six months. We will
either pay for emergencies by planning ahead, or we will pay
for them by using credit and going into debt.
Get your credit report. Go to
http://www.annualcreditreport.com and get a free credit
report. Take care of any delinquent debts, and dispute any
information that is incorrect.
Use automatic payments. Pay as many
things (including savings) as you can with electronic,
automatic payments. What we do not see or touch, we do not
Focus on getting out of debt instead
of having tax deductions. The deduction for $5000 of
interest paid on a home mortgage entitles you to no more
than $1250 savings on your taxes. Ask yourself, "Would I
rather have the $1250 tax savings or have $5000 in my hand
from not paying mortgage interest because my house is paid
off?" If I want deductions, I will give more to charities
instead of giving interest payments to banks.
Commit future monies to debt
reduction. Make the decision right now that at least 75% of
any raises, bonuses, tax refunds, or any other additional
income will go to dumping your debt.
© Jim Garnett, The Debt Doctor
AskMrG Consulting, LLC
2216 SW 35th Street
Ankeny, IA 50023
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Paul S. Richard
President - Executive Director
Institute of Consumer
Financial Education (ICFE)
About the ICFE:
The Institute of Consumer Financial Education (ICFE) was founded in 1982 by the late Loren Dunton (creator of the Certified Financial Planner (CFP) designation). The ICFE is dedicated to helping consumers of all ages to improve their spending, increase savings and use credit more wisely.
The ICFE is an award winning, nonprofit, consumer education organization that has helped millions of people through its education programs and Resources. It publishes the Do-It-Yourself Credit File correction Guide, which is updated annually. The ICFE has distributed over one million Credit/Debit Card Warning Labels and Credit/Debit Card Sleeves world wide.
The ICFE became an official partner with the Department of Defense/Financial Readiness Campaign in June of 2004.The ICFE was an active partner in the California Student Debt Resource Awareness Project (CASDRAP) which resulted in a new web site: (studentdebthelp.org). CASDRAP disbanded in 2010, shortly after the web site project was completed. In 2011 the ICFE assumed the single sponsorship of the (studentdebthelp.org) web site and is now responsible for its content and operation.
The ICFE is also an on-line help for consumers who spend too much. ICFE's spending help was featured in PARADE Magazine in the Intelligence Report section. The money helps and tips are from the ICFE's Money Instruction Book, our course in personal finance.
Visit the ICFE's other web sites at: www.financial-education-icfe.org and studentdebthelp.org. Both sites helps consumers and students with mending spending, learning about the proper use of credit, budget and expense guidelines, how to set up and implement a spending-plan and also how to access financial education courses and how to teach children about money. Other ICFE services include: Ask Mr. G, a free eNews, and an online resource center for students, parents and educators, plus financial education learning tools and a book store.