Riddled with Debt?  A Simple Three-Step Plan for Annihilating Debt.

In this article I advocate having a plan, taking action and getting on the same page with your significant other.  Along with three simple steps, these actions can make you feel more secure, peaceful and confident.  Those are good things to have in one’s life.   This runs counter to a lot of advertisements that promise debt consolidation loans and some other magical pixie dust which will solve all your problems.  Please avoid these things like the plague.  There is no silver bullet, and even the temptation of declaring bankruptcy is not as simple or as uncomplicated as it sounds.   Your best odds of success is to take control and take the debt head-on if you want it out of your life.  I hope you find my article helpful.

If you want to try this, my suggestion would be to build an emergency fund, of 1-2 months living expenses. Take a little bit of what you earn each week and put that aside in an cash emergency fund.   I attribute this idea to Dave Ramsey and his Baby Steps.  In his plan, he wants you to put $1,000 in an emergency fund as soon as possible.   The fund is cash, not stocks, bonds or other investments.   This money is stored in a bank or money market account.   He recommends that you be able to access without too much time delay, but not make it so easy to access that you are tempted to spend it on pizza.   He sets the emergency fund at $1,000 for his initial baby step, but I found that I did not get all of the wonderful fruits (especially on the job) until I had 2-3 months of living expenses covered, which for us, was a little higher than $1,000 in the bank.  Even just the $1,000 achievement felt great though.

Make a commitment to build your fund up then don’t touch it (unless an emergency does happen).  I was amazed at how relaxed and confident this made me feel at work.   I had more peace of mind and less fear.  That’s good.  What happened next though, was unexpected and transformational.  That little boost in self-confidence and peace of mind translated into me being a little more willing to speak the truth, or inspired me to take tougher challenges, and to take some risks.  And you know what?  The increase in pay and other rewards followed.   Since establishing my emergency fund, I saw my pay go up by 20%  in about 14 months — powerful stuff.  Thank you Dave Ramsey!

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