Most people in the United States have some kind of debt. Whether it be a mortgage or a car payment. The majority of debt is credit cards. We take imaginary money and spend it then we're expected to pay that money back. Only sometimes you get caught up in spending and can't actually pay it back. I never understood how getting out of debt could happen. A great tool to use to figure it out is Dave Ramsey's Financial Peace University. It's a set of CDs, books that break down getting out of debt. Dave gives simple instructions on using a debt plan and how to achieve it.
Most people live way above their means. Living in a house that is 4x what they can afford. They have 2 or more vehicles for the family that have high payments. They live above their means just to impress people. They feel if they have nicer things people will be their friends. If you are one of them its okay. You can achieve a debt free life. You can tell your money were to go. Not let your money control you.
Dave Ramsey's 7 Baby Steps to Achieve Debt Free Life.
Baby Step 1 – Between $500- 1,000 to start an Emergency Fund
If you use this fund, replenish it before continuing your debt payoff
Baby Step 2 – Pay off all debt using the Debt Snowball
Debt snowball is listing your debt in order smallest to largest. You pay the minimum on each bill and the smallest one you pay extra. Once you have that bill paid you take the full amount you used and add it to the next bill. You do this until every last bill is paid off!
Baby Step 3 – 3 to 6 months of expenses in savings
Baby Step 4 – Invest 15% of household income into Roth IRAs and pre-tax retirement
Baby Step 5 – College funding for children
Baby Step 6 – Pay off home early
Baby Step 7 – Build wealth and give!
This is a tried and true way to get out of debt. The foundation Dave Ramsey has is huge. He explains it in his book A Total Money Makeover about why he decided to get out of debt. He also explains the Baby steps in true detail. Are you living in debt? Do you want financial freedom? Read this book and live it!
"Live like no one else so later you can live like no one else." -Dave Ramsey
Information and pictures used from google