Will That Be Credit or Debit?

debit or creditWill that be credit or debit? This is a question many Americans are faced with every single day. Unfortunately so many Americans are choosing the latter more and more. Americans are drowning deeper and deeper in debt every year. According to the Federal Reserve bank, in 1968 consumer debt in America totaled about 8 billion dollars. Today, it is more than 880 billion! Fool.com reports that the average American home has $8,562 worth of credit card debt. Despite these overwhelming numbers and the sometimes overwhelming desire to use debt as a tool, there is hope for getting out of debt. Following some very simple steps could very well see you on a path towards being debt free.

Grandma always said “You need to save for a rainy day!” Boy was she right! Having an emergency fund is probably the most important step in becoming debt free. You have to have something to fall back on. It’s going to rain one day. You need to have an umbrella! The fact is however, Americans are not saving money. Last year CNN.com reported that the national savings rate was at the lowest rate ever since the Great Depression, yet 78 million Americans are expected to retire in the next 20 years. The reality is it’s hard to get out of debt if you have no savings. Emergencies will come up and without savings, it will seem like you are always taking a step backwards.

In order to become debt free you must make a choice to keep from going into more debt. This may sound like a simple thing but most Americans ignore it. Making a decision to not use credit cards and to pay cash for purchases is essential if you want financial freedom. Learning to have discipline and to stay away from making purchases using credit will allow you to change your financial life. Without such discipline you most likely will continue to struggle digging out of a hole.

One step in becoming debt free involves having a “Come to Jesus” meeting. By this I mean you need to come to terms with how much debt you have. Make a list of every debt you owe and who you owe the money too. Come up with a plan for paying the debt off. I like the idea of paying on the smallest debt and working your way up to the big ones. You get a sense of accomplishment every time you pay a small debt off. It gives you the ‘push’ to keep on fighting all the way to the top of your list. Whatever approach you choose, come to grips with what you owe. Hiding the bills in the drawer or not opening the envelopes, won’t make the debt go away.

Perhaps you feel as if you don’t have enough extra money to pay down your debts. If this is the case, you have an income problem. How do you solve it? Find some extra work. Taking a second job is a great way to make more money. Look for other ideas like selling things on ebay or having a garage sell. Most people have lots of junk that they could get rid of. You may even decide to sell some things that are not junk, in an effort to sacrifice and get out of debt.

Finally, look for opportunities to save money. Can you cut back on spending? Could you cut coupons for food? Maybe it’s time to stay at home and watch that expensive cable you have instead of going out. Whatever choices you make, making sacrifices in your spending can pay big dividends.

In the end becoming debt free is a choice. You must choose to change your habits. You must choose to take a stand and leave the credit world behind. You will make sacrifices, but if you stick with the above mentioned tips, you will soon be on your way to becoming debt free!