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11 Steps That Will Get You Off the Debt Roller Coaster


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View of roller coaster ride at sunset.
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For too many people, debt means more than just a high balance on their cards -- it's a vicious cycle from which they just can't seem to break free. They resolve to do better this month and make small gains and steps towards freedom, and then something goes wrong, and they wind up where they started -- or even further behind.

If you're prone to this cycle, here are 11 ways to reframe your mind and set yourself up for a positive, debt-free financial future:

1. Accept That You've Got Some Work Ahead of You

The first step in any change is to admit that a change is necessary. You need to get real with yourself and realize that you're in a bad situation and you'll have to take drastic measures to free yourself.

Making a little more than the minimum payment every month won't cut it; you need a total money overhaul. Until you admit (and accept) that, you'll never make any real progress.

2. Create a Budget

There is no way around it: You need a budget. Period. You'll never get your finances on track if you don't know what's coming in and what's going out each month.

Budgets are not evil; they are the road maps by which you will escape the debt roller coaster. Make one, and resolve to start following it. If you need help, here's the easiest budget ever -- designed for people who hate budgeting.

3. Change Your Money Mindset

The way you view your money has a significant impact on the way you spend your money. Until you learn to see your funds for what they are -- a tool to enable you to live a better life -- you'll continue to fall back into the same bad habits you've always had.

If you're a shopaholic, find new ways to relieve stress and entertain yourself. If you hate money and hate dealing with it, get to the root of that feeling (maybe you saw your parents struggling with their finances?) and start seeing your budget as something you have control over. Get your mind right, and your finances will follow.

4. Resolve to Pay Cash for Everything

Many people get into debt because they're in the habit of thinking that it's OK to buy things on credit. Flip your mindset: Start thinking about how you'll pay cash for everything in the future.

Imagine, for example, paying cash for a car instead of financing your purchase. To make this a possibility, you'll need to start "making car payments to yourself" -- setting aside $200 a month in a savings account earmarked for your next car. It's too early for you to start this now -- you have debt to pay off first -- but embracing a "pay cash" mentality will help you in this journey.

5. Resist Temptation

We all have weaknesses when it comes to our spending. Maybe you have a soft spot for good wine, or your favorite way to get over a bad day is to treat yourself to a new pair of shoes.

Identify your spending pitfalls so you can come up with ways to resist them, then do whatever it takes to break their hold on you. Cut up your credit cards if need be.

6. Create a Repayment Plan

How you pay off your debt is up to you. However, the most important thing is simply that you come up with a concrete plan and stick to it. A popular strategy is the debt snowball, in which you pay the minimum on all your debts, and then put as much money as you can into paying off the the card with the lowest balance. You wipe that dept out completely first, which will give you the pleasure of a quick "win" and keep you motivated. Then repeat the process with the next-lowest balance, and so on, until you're debt free. You can also try the common variation on the snowball that starts with paying off the card with the highest interest first, then work your way down the line.

7. Work More, Spend Less

To supercharge your savings, you need to start working that budget you've created to the max, striving each month to bring in more and spend less.

Look at each of your expenses and identify any you can trim or cut out altogether. Consider your "needs" versus your "wants." Simultaneously, think of ways you can start supplementing your income, whether it's taking on a second job or selling some of your old stuff on eBay (EBAY).

8. Get Aggressive

You may need to take some extreme measures for a little while, but when you're paying compound interest, every day you can shave off your repayment plan matters.

Consider some temporary changes you'd be willing to live with to reach your goal faster. Maybe you can downgrade your apartment for a few years. Maybe you even need to move back in with your parents, or find a roommate. It may not be terribly comfortable for a while, but financial freedom will be worth it.

9. Plan for Emergencies

One of the easiest ways to fall back into debt is to fail to plan for emergencies. While you can't foresee what will happen when, you can assume that something will manage to go wrong in the not-so-distant future, whether it's your car breaking down or your dog needing a pricey vet visit.

While you want to throw everything you possibly can toward paying down your debt, make sure to also include an emergency savings fund in your budget. Start with a target of $1,000 while you're repaying debt. Once you're done digging out, you can focus on building your cash reserves to three to six months of your expenses. Don't be caught unprepared when the unexpected inevitably happens.

10. Keep the End in Sight

Escaping the cycle of debt is a long-term goal. Change won't happen overnight, and there will be plenty of times when it will feel easier to give up than keep pushing forward.

To keep the positive momentum going and discourage yourself from backsliding, remind yourself often of what you're working toward. What will freeing yourself from debt do for you? Enable you to quit a job you hate and find work you love? Pay for your children's education? Save for retirement? Keep these goals front and center in your mind.

11. Go Easy on Yourself

Yes, it's possible to be aggressive and go easy on yourself at the same time. While you want to actively work to get your finances under control, you need to temper your newfound intensity with some serious kindness towards yourself.

Yes, you've made some mistakes in the past. But you've learned from them, and you're taking steps to correct them. What's done is done; stop beating yourself up about it and focus on how you can move forward.

Paula Pant ditched her 9-to-5 job in 2008. She's traveled to 30 countries, owns seven rental units and runs a business from her laptop. Her blog, Afford Anything, is a gathering spot for rebels who want to ditch the cubicle, shatter limits and live life on your own terms -- while also building wealth, security and freedom.

Three Ways to Pay Off Credit Card Debt


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