Breaking Free from Debt

Due to the worldwide economic crisis, it’s not unusual to hear people saying that they’re struggling to make ends meet. In fact, according to a Gallup survey, more than half of Americans are having financial problems. Because of the crisis, more and more people are having problems paying their bills and are racking up debt.

By definition, debt is an amount owed to a person or organization for funds borrowed. For many, borrowing cash or getting something on credit is a quick fix for money problems. However, the real problem starts when the debt starts to increase. In these tough times, staying debt-free may already be considered an accomplishment. However, economists believe that paying off debt can be easy if you are really focused on doing it.

Here are three simple steps that will help you get out of debt:

1. Stop getting new debt.
If you keep on adding on your things-to-pay list, your debt will eventually get out of control. Stop using your credit cards because they will put you deeper in debt.

2. Save cash for emergency.
You might be asking yourself “Why do I need to save before paying off a debt?” Simple – saving is more important than paying debts. This is because saving can help you cope up with unexpected expenses.

3. Implement a debt snowball.
Steps one and two may take you several months. The next logical step is to for you to pay your debts. It would be easier if you will pay your debt in increasing order. Settle the lowest balance first and then gradually pay the bigger debts until you pay off the highest. Set aside a specific amount to pay for debts every month. Always put your extra money to pay off your debt with the lowest balance.

Coping with debt is a long term process but if you have enough willpower, you will be able to get out of debt even if the economy is down. Here are additional tips to help you settle your debts:

• Find additional income.
Signing up for overtime, doing consulting or finding a second job can help increase your income and decrease your debt balance.

• Downsize when necessary and possible
This may sound difficult but the sacrifices will be worth it in the long run. Moving from a big house to a smaller one, selling one of your cars, eating at home instead of eating at fast foods and restaurants and decreasing your expenses can save you a lot of money to pay for your debts.

• Keep your credit cards at home.
Buying only what you can and paying in cash can help you stop adding more debts.

How to Spend Less this New Year

During the holiday season most of us has spent majority of their hard earned money on parties, reunions and gift giving. It is now time to pay all the debts and spend less and save more. Generally life is expensive. But that should not be reason not to enjoy life. Here are some practical tips on how to spend less from Sixwise.com Money Saving Insights and Wealth Management:

• Review magazine subscriptions.
Do you read all your magazines? Stop subscriptions that you don’t use or read and if possible ask or find the best deals for magazine subscriptions.


• Visit a farmer’s market.
Most cities have farmer’s market. You will find fresh and in season produce and the best part is that it cheaper than the grocery store.


• Take advantage of the discount rates.
If you’re a student, teacher or a senior citizen, most establishments offers discounted rates so don’t hesitate to grab it.


• Ask for the best price.
It is always a good practice when buying products, renting cars, booking a hotel room to ask for the best price they have. This kind of establishments don’t usually offer best price immediately, most of the time you must ask for it.


• Enjoy the outdoors.
Now is a perfect time to visit your area parks and forest preserves. Pack a picnic and head outside for some hiking, biking or just a little fresh air.


• Be a volunteer.
Not only is this a great mood booster and excellent way to meet new people, but if you volunteer at a theater or sporting event, you'll also get free admission.


• Cook dinner together.
Instead of taking the family to a pricey dinner out, stay in and cook dinner as a family. Choose something simple and fun, that kids can help with -- like quesadillas, tacos or veggie pizza.


• Stay active, stay healthy.
Being active, doing regular exercise and staying healthy is a good way to save money on health bills.


• Do home massage.
Give your partner a good massage. It's sensual, mutually beneficial, and free!