A great deal has changed in the past year, and even more has changed over the decade since we ushered in 2000. I recall that the world as we knew it might have ended due to us being unprepared for the dreaded Y2K bug, lurking in our computer networks!
Well, that never materialized and neither did our more positive resolutions to cut back on our debts. Now that we are a decade into the new century, it is appropriate to offer 10 new tips for the next year that will help you get that debt devil under control.
Here are my top 10 ways to get rid of consumer debt in 2010.
Know what you owe.
To get where you need to be, you need to know where you are starting. Gather up all your statements and determine how much you owe in total. If you don’t like the answer, this negative exercise can give you the oomph to get going.
Yes, you can, with a plan!
Having a spending plan for your income is the best way to ensure that you are spending your hard-earned money in the way you want and most importantly, in the way that assures your financial success.
Make your own Treasury stimulus plan.
Review your income tax withholding. If you are receiving a tax refund of more than $600, you are providing an interest-free loan to the IRS. A better idea is to adjust your withholding — have less money taken out for income taxes — and use those funds earning zero percent interest to help pay down your high interest consumer debt.
Save like there is a tomorrow.
Start an automatic savings plan. The simplest way to avoid unwanted debt is to have money set aside for those unexpected or large expenses that we all have. When you have money taken from your paycheck or checking account and automatically deposited into a savings account, you will hardly notice. But you will be building a very important financial tool — liquid savings. Your savings goal should be six months to a year of living expenses.
Half of nothing will be something.
Commit money you don’t have yet to paying down your debt. Use at least 50 percent of any new raises, bonuses, tax refunds or other source of additional income to give yourself a boost in paying off expensive debt.
Beam my payments up, Scotty.
Set up automatic electronic banking payments. A late payment can trigger a hefty late fee, and may result in an increased interest rate on future credit card purchases. Electronic payments will help avoid a payment arriving late and increasing the cost of your debt.
Take some time to review your credit reports to make sure they contain accurate information. Get a copy of your reports for free at AnnualCreditReport.com. If you have ugly credit caused by errors, this will hurt your credit score. If you find inaccurate information, dispute the item with the credit bureau that reported it.
If it’s too good to be true, it is.
Don’t fall for debt settlement scams or schemes. Lenders don’t want to settle. If you must, use an attorney or don’t do it at all.
Jingle bills, jingle bills …
Don’t forget to plan for 2010 holiday expenses. Every year, people seek help after the holidays because overspending on gifts, travel and other holiday expenses pushes them over the financial edge. Set a limit, fund it with yearlong savings and enjoy the season for a change.
Don’t call the Ghostbusters.
Ignoring a financial problem will only make matters worse. Get professional help now if you need it. You can find a trusted, nonprofit, free credit counseling agency at Aiccca.org or Nfcc.org. Card issuers will be required to include a toll-free number for credit counseling on statements after February.