How to Become Free From Debt [guest post]

highline trailAlmost any form of debt is antithetical to the Foundry lifestyle: credit card debt and car loans are out of the question; college and home loans are a maybe, but should be avoided if possible. If becoming financially independent is akin to climbing a mountain, taking on debt is like leaving the trail to take a crap in some poison ivy.

Not having any personal experience with debt puts me at a disadvantage when it comes to writing about the topic. Luckily, Foundry reader Randolph Warner offered to write up some tips on getting oneself out of debt. Randolph writes about personal finance and business. His most recent work is focused on helping people earn Master of Finance Degrees.

Take it away Randolph…

Freedom from debt is something that many people are seeking. Nothing about pulling yourself up out of a financial hole is easy, but there are many steps that you can take to make the process a little simpler. To give yourself a little bit of assistance, here are a few tips to help you along your path to regaining financial freedom:

Assess The Situation 
Many people know that they are in great financial distress, but really do not have a lot of specific knowledge regarding their situation. The best thing that you can do is to gather up all the information you have, including the current bills you are receiving and the information that can be obtained from your credit report to get a complete list of what you owe and to whom you owe it to. Then, you can see where you’ll be 6 months, even a year from now, assuming things stay the same.

Start Small 
Take your newly acquired budget and order all your expenses so that the smaller amounts are at the top of the list, and put the rest in ascending order from there. The game plan is to start making payments on these smaller amounts to begin paying off items that you have to check them off of your list. With each of these paid off things, your credit score then has room to improve.

Get Some Help 
Many services are available to give people an opportunity to lower their overall debts to specific collectors. Consider how much easier it might be for you to pay off a bill if it had hundreds of dollars shaved off of the total amount. These services specialize in bartering with companies to get them to settle at a lower amount, which could theoretically save you thousands of dollars, depending on the current debt situation you are in.

Pace Yourself 

This is not a problem that you are going to be able to solve today. You have to take some time to figure things out and make changes. Professional assistance can help save you a lot of money, but it still might not be something that you can take care of all at once. Pace yourself and ensure that you are not putting significant financial strain on yourself to take care of this, which could result in a cyclic return to debt in the future.

Avoid Traps
All kinds of things play a role in reducing debt. Some people think debt consolidation loans are the way to go, but these carry problems of their own. Never leap at an opportunity like this, no matter how promising it may sound, as it could have severe consequences for even the slightest mistake or setback.

Seek advice from a professional who can give you a sound approach and a plan to get out of debt that can work with your current budget limitations and a time span that you can live with. It is not an easy road, but one that you can easily travel if you take the right steps.

Thank you, Randolph! Great article. The only thing I would add is that even if you’re in debt, you should still have a small emergency fund. Having said that, I can’t stress how huge of a financial emergency it is to be in debt. Do whatever you can to get out of that situation, as it will set you back decades on your path to financial independence.

2 thoughts on “How to Become Free From Debt [guest post]”

    1. We still rent, but we’re saving pretty aggressively for a large down payment on a house. We’re not dogmatic about buying with 100% cash, unless it takes us so long to find a house we end up saving enough to do so. We’re pretty picky about the house and willing to wait to find the perfect home.

      In general, I’ve found that majority of financial stories are actually pretty boring. The outliers (e.g. Google and Warren Buffet) are so interesting because they’re so rare. The rest of us just spend less then we make.

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