I recently came across an article that I wanted to share regarding climbing out of debt.

Many times financial problems include more than just your credit.

It also includes the amount of debt that you owe.

Having to much debt can pull you over the edge to financial ruin.

Your financial lifestyle includes your credit, debt, budget, income, and emotional state of mind.

Climbing out of debt takes more than just the money to pay if off.

Climbing out of debt means changing your mind set about your financial lifestyle.

"Sometimes when people are loaded with debt, they take the ostrich approach and deny that there is a problem until they have exhausted all of their monetary resources.

Not acknowledging the problem will only make it worse and create a bigger hole to climb out of later.

Debt problems can be caused by both financial and emotional issues, and it's important both are addressed to make life-lasting changes in spending and saving habits".

Source Yahoo Finance – Drowning in Debt 7 Steps to Climb Out

Step 1 Gather Information to climb out of debt.

This step is really important. 

You need to get out all your bills even if they are not on your credit report.

As you are collecting the information write the payment amount, interest rate, and due dates.

Collect all asset information including Cd's, money market, stocks and property.

You also need your insurance information from all of your policies.

Step 2 Develop a Bare Bones Budget to climb out of debt.

This step is one of the harder steps for people to accomplish.

Living by a budget takes sacrifice.

Once you know all of your debt you can come up with the budget.

You need to shop for groceries with a list.

You need to reconcile your checkbook each month.

If you are married or have children every one needs to be on board with living by a budget.

Step 3 Make it a Family Affair to climb out of debt.

You should meet with your spouse and children on a regular basis.

Areas that your family is weak in work them out so that they do not derail your progress.

Step 4 Contact Creditors

The article suggest that you contact your creditors to lower your payments.

I disagree with doing this step.

Once you make that call some lenders will pull your credit report to look at your overall credit situation.

Some of your accounts may be closed by them to limit the risk of you not paying off the balance.

I would only contact new collection accounts that you may be aware of when you go through your bills.

 Step 5 Look For Debt-Reduction Sources to climb out of debt.

In this section the article talks about finding ways to cut your exemptions from your paycheck.

I would not eliminate my 401K contributions or stop buying savings bonds as the article suggest.

I would simple cut down on the amount.

Many times when you completely stop contributing to your retirement it is hard to start back up.

The article also suggest getting a loan from a family member at a cheaper interest rate than your current lenders.

I belive that this is a very bad idea.

Money and family do not mix.

If something happens where you can not pay the money back it will strain or ruin your relationship.

Finding another way to cut back is a better idea.

Getting a second job can help.

You just need to way the option of the the time, travel and income the second job brings in.

Other members of your family who may not be presently working can pitch into gain employment.

Your family working together for the common cause will get you to your goals faster.

Step 6 Develop Emergency Cash Reserve to climb out of debt.

Based on your budget from above you need to save money for emergencies.

I call it the Life Happens Fund.

You never know when Life is going to happen.

The goal according to the article is to save 3-6 months worth of living expenses.

You must start where you are.

The more you save the more of a habit saving becomes.

Step 7 Plan Mid-Term and Long-Term Financial Goals to climb out of debt.

As your financial situation starts to turn around and your head is above water.

You should start to make plans regarding your financial future.

Having a large or small amount of debt can be overwhelming.

When your income does not cover your monthly expenses climbing out of debt can seem impossible.

You must take a very harsh reality check into your expenses.

For example you can live with out all the movie channels on cable.

You can bundle some seriveces to cut down on your bills.

You can take your lunch to work to save.

There are a number of things that you can do to climb out of debt.

You must be willing to make the sacrifices necessary to climb out of debt.

Are you ready to climb out of debt???

Your financial coach,

Renee Lawson

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