4 Steps to No Debt June 5, 2012My MoneyOff

Tips on debt are a dime a dozen (we did the math). With all the info out there, how can we determine what truly works?

Forty-five percent of women have $50,000 or more worth of debt, according to CareOne Debt Relief Services.

“The topic of debt is a tender subject,” says author and financial advisor Carol Holm. “If you’re in debt, it’s difficult to listen to people chastise you for getting behind in the first place. But lecturing isn’t going to do any good.” So, what will?

Holm’s four pillars of advice are: keep track of everything you spend, create a budget and (really) stick with it, use a debt eliminator system and, finally, start a “put and take” savings account reserved for major purchases and emergencies.

She likens getting out of debt to losing weight – tracking what you eat (or what you spend) makes it easier to pinpoint weaknesses. Next, Holm says dividing money into cash envelopes can help when it comes to sticking to a budget, since “if you use up all your money, you’re done.”

Then, make a list of all debts and the total amount you owe. Work to pay off small debts first, then put that amount toward the second creditor – and repeat.

Lastly, while you may be reluctant to build your saving account, “remaining debt free will be next to impossible unless you have a savings account for major purchases and emergencies,” says Holm.

Experts say it’s helpful to change how you think about money. Consider purchases in “hours worked” vs. dollar amounts, and create a balance sheet you update every month for reference.

Bonus PINK Link: Get more on these tips from Holm in our online exclusive.

What real-life tips have you used to eliminate debt? and let us know!

By Caroline Cox

“Change our attitude, [and] we should not only see life differently, but life itself would come to be different.”
Katherine Mansfield

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