Debt Cures

Tamsen Butler
There is no magical instant way to cure debt.
There is no magical instant way to cure debt.

If you're looking for debt cures you should first realize that ending the debt cycle does not end with getting the debt paid off. You must also proactively maintain a debt-free lifestyle before you can make the claim to have been cured of the debt cycle.

The Debt Cycle

There are plenty of people who never make a concerted effort to get their debt paid off completely. There are also some people who make an aggressive effort to get debt paid off and make the declaration that they will never have debt again; but once the debt is paid off they go right back to the same type of behavior that got them into debt in the first place:

  • Using credit cards for purchases instead of paying with cash or a debit card
  • Not budgeting expenses ahead of time
  • Buying impulsively
  • Splurging with a credit card instead of saving for a purchase after deliberate consideration

Debt cures are about much more than simply getting debt paid off. You have to also change your spending habits and the way you deal with personal finance so you don't wind up back in debt.

The Steps to Debt Cures

There are many different ways to approach debt cures. The important thing to do is to have a definitive plan that shows you exactly how to get the debt paid off as quickly as possible while also stopping you from getting back into debt.

Savings

Resist the urge to drain your savings account to pay off your debt unless you have enough money in your savings account to pay off the debt and pay for three to six months worth of expenses. The reasoning for this is simple; if you drain your savings account to pay off debt and then have a financial emergency, you need to have enough money in your savings account to cover the emergency. This usually results in utilizing credit to pay for the unexpected expenses, so you wind up back in debt; but this time you don't have a savings account to fall back on.

If you don't have any money in a savings account, first make a concerted effort to build up a small emergency fund and then attack your debt.

System

You have a few different options when paying off your debt. Most people decide to pay off their debt in a particular order, such as in the order of smallest to largest debt or in the order of highest interest rate to lowest. Whatever system you choose, make sure you have a system in place and adjust it frequently if it isn't working as well as you had hoped.

Keeping accurate records of the shrinking debt balances is a great idea so you can see the progress you have made as the debt is paid down.

Zero Balances

Zero balances do not automatically translate into debt cures. Paying everything off is only a portion of the battle when it comes to debt cures. How can you make sure that you are entirely cured of debt and never fall back into the same spending patterns?

  • Build up savings. Make it a priority to pad your savings account with an abundance of cash. If you have a substantial amount of money in your savings account then you won't have to turn to a credit card when a financial emergency arises.
  • Close the credit accounts. If you truly want to be cured of debt, close all the credit accounts you pay off and never open another credit account again. Although it is true that this will lower your credit score, it is an essential move for anyone looking to be free of debt for good.
  • Budget. You have to know where your money is going if you are going to manage your personal finances in a way that allows you to avoid debt.

What are the best debt cures? Pay off the debt, build up a savings account, and give up using credit for good.

Debt Cures