Make 2010 the Year to Becoming Debt Free

Imagine waking up one day having your utilities bills, your car payment, your credit cards and your mortgage fully paid. Just imagine the heavy weight lifted off your shoulders. It is nice to be debt free. You don’t just have to imagine it. Make it your resolution for 2010: Make 2010 the year to becoming debt free.

It’s not impossible to become debt free. All you need is a little discipline and a little management. You have to learn to properly manage your finances and you’ll be on the way to becoming debt free.

Below is a list of five ideas you can use to start on your road to becoming debt free.

1. Change your spending habit. What drove you to become deep in debt is your spending habit. You must know that if you spend more than you earn, you’re going to get into trouble. And when you find that your salary has depleted, you reach for your credit card. Bad move.

Of course, credit card companies want you to spend and spend and pay them later. They charge you exorbitant interest and they earn when you spend. Remember this. The money you spend when you use your credit card isn’t your money. It’s the credit card companies’ money and that means you’re borrowing money from them. And when you borrow money you have to pay it back or you’ll get into trouble.

First thing you need to do to change your spending habit is throw away all your credit cards. Don’t use them anymore. Cut them in two and throw them away. Only use cash. If you have no cash, don’t spend. This is so easy to say but can be hard to do. That is why you need all the discipline you can muster to change your spending habit.

2. Change your lifestyle. Next thing you need to change is your lifestyle. If you’re always dining out and watching movies, stop doing them. Eat at home. Watch television. Buy generic clothes. No more designer labels. Buy only what is essential. Remember only what you need and not what you think you want and must have.

3. Pay all your bills on time. When you get your paycheck, set aside an amount to pay all your fixed bills like your utilities, your rent, your car payment and so on. These are payments that you need to make every month. If you don’t pay them on time monthly, you’ll find them accumulated to such a staggering amount that you’ll be so stressed thinking about how to settle them.

4. Have a budget plan. Now that you’ve paid your fixed bills, you can start thinking about settling your debts. List down all your debts and arrange them from the smallest to the largest. Try to settle the smallest ones first and then tackle the bigger ones. In your budget you must set aside an amount for your own daily spending and the leftover can be used to settle your debts.

You might want to come to an agreement with your creditors about how to settle your debts. Once you’ve come to an agreement, make sure you follow through in a timely manner.

5. Savings. Don’t forget to put aside a little money for any emergencies. This amount doesn’t need to be big. You could maybe put aside about 5% from your paycheck to an emergency fund. This fund will help you in times when you’re in need of money urgently.

Changing your spending habits and your lifestyle is most important if you plan on becoming debt free. You also need to have a budget plan and a little savings set aside and don’t forget to pay all your fixed bills on time. Doing all these will hopefully make 2010 the year to becoming debt free.

How to Stick to a Savings Plan

Sticking to a savings plan is often a matter of lifestyle changes, courage and discipline. Spending money is easy if you possess the money and with the use of credit cards you can come in trouble if you don't efficient plan.

Saving money is essential for short and long time goals but many people struggle to stick to a savings plan. Making saving to a habit is necessary if you want to succeed but it is easier said than done. We all have daily expenses we can't avoid and it is often difficult to maintain a certain saving habit if you struggle to pay all your bills or if you are not be able to resist the temptation to buy new clothes, DVD's, electronic gadgets or other things you don't need.

Sticking to a savings plan is often a matter of lifestyle changes, courage and discipline. Spending money is easy if you possess the money and with the use of credit cards you can come in trouble if you don't efficient plan. Learn to say "no" if you come in the temptation to buy and deposit the money you wanted to spend into your savings account.

Here are some suggestions which may help you to stick to a savings plan:

1. Make a budget

It is almost impossible to stick to a savings plan without a budget. A budget allows you to calculate how much you can save. A budget reflects your expected earnings and average expenses and you can create an attainable savings plan.

2. Write your saving goals down

You may have different savings plans and a certain date when you want to reach a certain amount in your savings plans. You may want to save for traveling in a certain month; it is easy to calculate how much you need to save every month for this purpose. Write down every month in a notebook how much you withdraw. It may happen you can't save every month the same amount; if you have saved fewer during a certain month you can increase your savings the next month to get on time the money you need.

There are certain savings plans, for example retirement plans which require a certain amount within one year and the easiest way is withdrawing a fixed amount each month in this account. A similar system can be used for investment purposes, for example investing in mutual funds through systematic savings plan.

Maybe you can best use a separate book for every savings plan and write down the amount you want to save, the date and the amount you withdraw into your savings account and if you didn't withdraw the necessary amount; you can best this mark it in yellow or any other color you prefer. This will make it easier how much you need to save more next month.

3. Make saving automatic

It is easy to create a plan where a certain amount will be transferred from your bank account to your savings account. It is preferable this amount will be transferred at the beginning of the month; you are sure you stick to your savings plan and you only have to keep an eye on your expenses to avoid you can't pay your bills anymore. You know how much you still have on your account and you can interfere to cut down expenses if you come in trouble.

4. Create a piggy bank

A piggy bank will help you to save some extra money. Deposit every coin you find or which you get back from the grocery or other shops when you make your purchases into a piggy bank. At the end of the month you can deposit this money into your savings account and you will save create some extra savings which ease to reach your savings goals.

5. Avoid using credit cards

Using credit cards can cause impulse spending and many people will likely spend more than they can afford. People use these credit cards too often and don't have an overview anymore of their expenses with a possible consequence they go in debt. Using credit cards will increase the temptation to make more purchases than necessary and it is difficult to stick a savings plan because often they spend more their your budget allows.

6. Rewarding

Sticking to a savings plan will be much easier if you reward yourself if you save more than you planned to do. It is a motivation key to save more money and to reduce expenses. This rewarding don't need to be expensive, for example a dinner in a restaurant with the family, a theatre visit, a DVD or some clothes you wanted to buy already for some time. You only have to ensure you don't spend all the money you have saved above your savings plan.

Sticking to a savings plan is easy if you can make it to a habit. Some people may struggle when they start but with some creativity; courage and changing spending habits, they will likely succeed to reach their goals. There are many possibilities to cut your expenses and you will be surprised how much money you can save in one month and ease to stick to a savings plan.

Trick Yourself into Saving Money

It's tough making ends meet and even tougher to put money aside for emergencies. By getting into the habit of saving and following these easy tips for saving money you'll be on your way to a bigger bank account.

One of the best pieces of financial advice is to pay yourself first. After all, if you never even see the money in the first place, you won’t miss it. Even if you only save a little at a time, the savings add up if you continue month after month. Whether you are saving for the long term such as retirement, a new home, or college or to fund a one-time splurge like that Coach handbag you’ve been eyeing, you can use a variety of tools and tricks to save more money relatively painlessly.

Automatic deductions – Set up regular, automatic deductions from either your paycheck to your savings account (if available from your employer) or from your checking account to savings. As time goes by, these systematic transfers add up. In addition, you will quickly become accustomed to the lesser amount of your paycheck. When you get a raise, consider increasing the amount you save. For example if you have $50 transferred from your paycheck to your savings account each week, by the end of the year, you will have saved over $3000.

Bill yourself – If automatic transfers or deductions aren’t an option, bill yourself. That’s right, use your computer and a printer and print out a series of twelve monthly bills for the amount you wish to save. Place one “invoice” for each month in the file you use for your monthly bills. As you sit down to pay your bills, write a check to yourself and deposit it into your savings account.

Sign up for free bill pay – many banks now offer free online bill paying. This saves both time and postage. Once you set up your payees, add yourself as a payee too. When paying bills, don’t forget to pay yourself. At the very least, transfer what you would’ve paid in postage into your savings account.

Choose a higher yield bank account – If your savings is sitting in the standard savings account that’s linked to your checking account, chances are it is earning minimal interest. Today, many online banks offer significantly higher interest rates. $3000 in a typical savings account that offers 1% interest would earn $30 after one year. An account offering 4.5% interest would generate $135 in interest after one year.

Take the free money – If your bank offers an incentive program such as Bank of America’s Keep the Change program, enroll in it. This particular program helps you save by rounding up your purchases to the next dollar and transferring the change to your savings account. While you can do this yourself, the perk here is the matching funds. For the first few months that you are enrolled, the bank will match your savings!

Free checking – If you are still paying a monthly fee for your checking account, renegotiate or switch banks. Many banks offer free checking, while others will if you have your paycheck deposited directly. Use the savings to increase the amount you pay yourself.

Use sub-accounts to earmark your funds – If your bank allows it, you can set up multiple savings accounts and use these for individual savings goals. For example, ING Direct is one such bank that lets you do this. You could have one savings account earmarked for your annual property taxes, another for Christmas spending money, another for vacation, and another for emergencies. To top it off, ING Direct offers one of the highest interest rates you’ll find.

Save your five dollar bills – Whenever you get a five dollar bill as change, place it in a special place such as a separate compartment in your wallet or purse, a coffee can, or a piggy bank. At the time, it’s not a painful sacrifice. Over time, the five dollar bills add up.