Clearing debts is the key.

Do you owe anybody any money?

Clearing debts is the key.
The relief of the final payment.

It's a very rare individual who can honestly say no to that question.

Most of us have borrowed money from someone at some stage.

Now you probably have figured out that I'm not talking about the $20 you borrowed from your friend when you were out together.

No, most of our borrowings are for things like car, house, holidays, education etc.  And that's not even thinking abut the general expenses we put on out credit card every day.

Borrowing money is not a problem if you are able to pay it off at the end of the month. Not counting the car or house here.

If you are in the unfotunate position of not being able to clear your debts every month then you are in a financially precarious position.

Should you lose your source of income you would really need to scramble to reduce your debt load fast.  If not you'll be hounded by creditors and totally trash your credit rating.

OK, lets not think about losing the source of income but lets start reducing the debt load anyway.

Getting rid of risk once you have identified it is always the best way to go.

There are simple and easy steps you can take right now to take control of your spending.  You'll clear your debts in double quick time but you will have to do something you probably haven't done before.

You will have to write down everything you owe with the interest rate and the current payments you are making. This is not to frighten you but you can't fix something if the don't know exactly what needs fixing.

Also write down everything you spend money on each day, you may have to keep all your reciepts for a couple of days to find out but you need to know.

Would you believe that you are now ready to clear the credit cards and start down thr path to debt freeness (is that a word? should be).

Here are the steps, so simple you can do this. Clear up some extra money from your daily spending, you are probably spending $5 - $10 every day that you don't need to, most of us are (or were). Put this additional money onto your most expensive credit card. Do not add any more purchases to that card. Keep making the payments on everything else.

Once that card is paid off cut it up. You really don't need an expensive card.

Put the total amount you were paying off that card including the extra, into paying off the next most expensive card. While you are paying off one card don't use it, it just makes it harder to clear the debt if you keep adding to it.

In todays world it is difficult, if not impossible, to exist without at least one credit card. I have one credit card and one debit card. I mostly use both of them as debit cards so I can only spend what I have in the account.

Now you are on a roll, this method snowballs your repayments into the next most expensive debt until they are all cleared up.

Once you get to the point of only having a house mortgage to clear up you can split the extra repayment so some goes onto the mortgage and some goes into an emergency fund.

An emergency fund is just that, only for emergencies.  I don't know how much you need in this fund but I like to keep at least $10,000 available.

OK, that's it for this post and that is really all there is to clearing up debts.

Yep it can take years but believe me it's totally worth it.

Just the feeling that I can pay off all my credit card purchases at the end of each month is great.  No more worrying about what things cost because there is always money in my accounts.

Now it's your turn.  Get stuck in. Leave a comment on your progress.

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