How To Be Debt Free In The New Year

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Unplanned spending, using credit cards is the number one reason that drives most of people into credit card debt. If you are currently in debt and thinking of having a debt free life in near future, you need to start to look into your debt seriously. Here are a few things you can start now to make you debt free and make your New Year more enjoyable.

Change Your Spending Behavior

You cannot become debt-free if you spend more than you earn. Its that simple! Financial stress relief is having money in the bank +positive cash flow. You need to know where you money goes. This can be done by listing down your regular and non-regular expenses. Think twice for any item which you plan to buy, ask yourself whether it is a need or an optional item.

Have Your Budget Plan

Make a budget plan for yourself and eliminate or at least reduce optional stuff such as entertainment, dinner at restaurant and luxury vacations. Plan your budget according to your financial capability and spend according to your budget. You will be able to achieve your debt free goal if you can plan for a positive cash flow, which means that you spend less than what your earn.

Pay Your Bills On Time

Managing monthly bills is an essential part of staying debt free and maintaining a good credit rating. If you find this difficult, come up with a system to ensure that bills are not paid late. For your current credit card debt, you may get help from finance experts such as credit counseling or debt consolidation services; they are widely experienced to help people in debt management.

Define Your Financial Goals For Long-Term and Short-Term

To change your spending behavior overnight may be difficult, but if you set your financial goals, both for short- and long-term, it is easy to make the necessary spending cuts to get what you really want. So set your realistic financial goals for year 2009 and a few year down the road. Manage, control and cut unnecessary expenses so that your can achieve your financial goals.

Plan For Adequate Emergency Funds

You never know what will happen tomorrow, there may be some emergencies which will need a lump sum of money instantly, such as medical bill due to major illness or accidents; money to cover to income shortages such as temporary loss of job. Three to six months worth of bare-bones living expenses should shield you from most of these problems. Make the savings your habit.

Learn to Invest Your Money Wisely

Investing can make our money earn more money and keep you out of debt. Learn to invest with your money to grow it. There are many investment plans available in the market, range from insurance, to mutual fund, to stock market. Investments make you grow your money; on the contrary, it may cause you to lose your money as well if not done wisely. Normally high gain investment will have higher risk than low profit investment. You need to understand your own risk profile and select the investment scheme that meet your risk profile. You can start your learning by taking a class, find a referral to a good adviser or just start reading. Do it your way, but do it; and start now!

So, these are some tips for Your Debt Free Plan. Wish you have a Happy and Debt Free New Year.

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