Moving On When You Have Debt

Many of us have gotten into debt at one time or another. Some have paid it off or some are still carrying it in forms of credit card debt, a mortgage, home equity line of credit, or student loan debt. Carrying this debt can saddle your finances and put the rest of your financial life on hold. There are many reasons why you got into debt. Perhaps you didn’t have any savings, or you lived beyond your means or an emergency came up and you weren’t prepared. Don’t let your debt be the obstacle on your path to financial freedom. Regardless of the situation you are in, you need to change your financial habits and your approach to money.

While you will focus on paying your debt down with the majority of your extra money, you can start a savings account at the same time. There are differing thoughts to this approach, but seeing a savings account grow can truly install a sense of financial hope and motivate you to remain on a financially healthy path. At this time, recall why you got into debt in the first place. One reason might have been that an unexpected expense arose and you weren’t prepared. Having a savings account could have rescued you in that situation.

Making the savings account automatic will help you get back on the path to financial freedom without even thinking about it! Setup a savings account that is linked to your checking account and have the money automatically deducted every month. You will be earning interest in your sleep. To figure out how much you should be saving, come up with a total dollar amount of extra money that you have to pay down debt. For example, if that amount is $500 per month, then you could take $25 or $50 and use it for savings. Most of your extra cash flow will still be used to pay down your debt.

Consolidating your debt to one or two places will make this process much easier. You should also have a debt repayment plan. The practical goal is to pay down your debt as fast as possible. However, for this to happen you need to change how you think about your money. Having a savings account can be instrumental in motivating you to reach this goal.