Most people are unhappy with where they are financially says Peter DiCaprio. Whether its student loans, credit card debt, or simply not enough money in the bank to cover life’s many expenses, more and more people are getting trapped in a never-ending cycle of debt.
But you don’t have to be one of them! It might seem impossible today, but there is hope for all who want to get out of debt once and for all.
Here are 3 steps you can follow that will lead you to complete financial freedom:
Step 1: Stop Living Paycheck-to-Paycheck
The worst thing about being in debt is that it forces us to live paycheck-to-paycheck just trying to keep up – even if we’re barely keeping up at all. We have to do everything in our power just to get by (and stay in the same place!) – Where is there any room for savings?
But what about emergencies? What if life throws us a curve ball and we need that money for something else other than bills or groceries? If you’re living paycheck-to-paycheck then it’s not really “extra” anyway, right?
Wrong! It may not be extra, but it IS possible. All you need is an emergency fund stashed away somewhere where you know it will be safe, like under your mattress *wink wink*. You can save whatever portion of your paycheck isn’t already spoken for – even if that just $25 per week.
Then, when life throws you a curve ball and you need some extra money to cover an unexpected expense – whether a medical bill, a flat tire, or your dog’s vet bill after he ate your entire paycheck – you’ll have it. That’s what an emergency fund is for says Peter DiCaprio.
Step 2: Automate Your Savings
An emergency fund is great but if we never see our savings then how will we know it exists? We could easily just spend the money on something else before it’s even saved up! So let’s automate that savings process so that we’re never tempted to touch the money in the first place.
There are plenty of places that offer free checking accounts with no minimum balances or monthly fees. You can find these places by doing a quick Google search or asking your local banking advisor. Then, once you’ve opened the account, take whatever portion of your paycheck isn’t already spoken for. And transfer it automatically to that savings account each time you get paid.
That way, you’ll always know how much is in there so you won’t be tempt to spend it. And it will grow bit by bit until one day you realize that’s not just $1,000 in the bank but $10,000! What happened? Well…
Step 3: Spend Your Savings
It sounds crazy but this last step is actually pretty simple. Once we have an emergency fund built up (in our free checking account) then all we need to do is make sure we never touch it. Instead, we spend our money on the things that really matter – like debt repayment.
We don’t just toss that cash into a piggy bank or drawers though – that would defeat the whole purpose! Instead, once your savings account is fully fund (and you’ve automated both saving and spending). Then go ahead and start paying off any high-interest debts you have instead of putting it in savings explains Peter DiCaprio.
For example, if your credit card has an interest rate of 20% then pay down as much as you can each month until it’s goes completely. The longer this payment process takes the more money you’ll save by not having to pay all those extra interest charges!
How to finally get Out of Debt (and Stay out of Debt)
Anyone who has ever been in debt knows that it can seem like a never-ending cycle. But it’s not! Dave Ramsey and his cohorts will tell you exactly how to break free from your chains and live the life you’ve always dreamed of! And today is as good a day as any to start.
In order to have a healthy, happy financial life you have to start by getting rid of debt says Peter DiCaprio. It doesn’t matter how long it takes – all that matters is that you get rid of it. So what are you waiting for?!