How to Avoid Debt

Step1

Commit to getting out of debt and never borrowing. Write this down. Tell your friends. Make sure your spouse is in agreement with this.

Step2

Get on a written monthly budget. This means that you spend all your money on paper before you actually get the money. Designate where every dollar will go before you get it, and don't designate any money that you don't have. If you have a balanced budget and you stick to the budget, then you will not go into debt.

Step3

Start saving for an emergency fund. If you are currently in debt, only put $1000 in an emergency fund until you are out of debt. Once you are out of debt, put aside about half a year of expenses. This way, if an emergency comes up, you will not have to borrow a dime to deal with the financial aspects of the emergency.

Step4

Don't fall for the myth that everyone has a car payment and that the only way to buy a car is to buy it with borrowed money. Remember that your value as a person does not lie in what car you drive. Unless you can afford to pay for the car in cash, you cannot afford the car. Never buy a new car, since cars drop in value dramatically in the first two years or so, and they lose thousands of dollars in value the minute you drive them off the lot. To buy a car in cash, just set aside a certain amount each month (say, $400, which is less than the average car payment), and in just a year, you will have nearly $5000, which can buy an excellent used car.

Step5

Get a job while you are in college to pay for college, and work full time during the summer. Rent a cheap apartment off campus if it is cheaper than dorms, and live with as many roommates as you can.

Step6

Never cosign for anyone else. If a lender thinks your friend or relative needs a cosigner, it means that the lender thinks your friend or relative will not pay the money back, and the lend is right. If you cosign, you will owe the entire amount.

Step7

Get health insurance. If you don't get good health insurance through your employer, consider getting an HSA-type insurance plan (health savings account.) Such plans have very low premiums, because they have very high deductibles. If you have such a plan, you set aside the amount of the deductible each year in a savings account, and pay for the initial medical expenses from that account. Then if there is an emergency or other serious problem - and medical emergencies can costs hundreds of thousands or millions of dollars - then the insurance company will cover it.

How to Avoid Bankruptcy

Step1

Remember that if you have any secured debt, such as a car loan or a home loan, that you cannot cancel the debt without selling the item. So, if you declare bankruptcy and you own a car that has a car loan, either you have to sell the car, or the loan stays.

Step2

Also remember that student loans (and least the federally insured variety) are not bankruptable. They will stay around until they are paid off or until you die and bankruptcy will not do anything about it.

Step3

The first practical step is to remember to do priorities first. Don't let some collector from a collection agency stop you from feeding your family. Food is first, utilities are second, and then come things like paying your house, your car, and for some clothing. Let the collectors yell and scream.

Step4

Get on a written budget. A written budget is where you plan where the money goes before it comes in. Doing this will give you control of the situation. If a creditor calls and asks you to pay more than you have in the budget, tell him that the money just isn't there - tough luck, he'll have to sue you. (Most credit card companies take a good long time before they actually get around to suing someone.)

Step5

Stop all 401(k) and other retirement and college saving contributions.

Step6

Tell your unsecured creditors (credit cards, etc) that you are considering bankruptcy. In a bankruptcy, they might not get anything, and they will have to, by law, settle for what the judge decides they get, so they may be more willing to negotiate.

Step7

If you have a student loan, try to get it put on hardship deferral until you get back current with everyone else.

Step8

Try to sell your secured assets, especially cars. If you owe more on the car than what it's worth, go to a local bank or credit union and try to see if you can get a loan to cover the difference. You can also talk to the company that holds the car loan and see if they will let you sign a note with them for the difference in sales price and what you owe.

Step9

Sell your other stuff. Have garage sales and put everything you can on eBay. Use the money to get yourself back on stable ground.

Step10

Get extra part time jobs. Look at local pizzerias to see if any of them need extra drivers. If your elderly neighbor's lawn needs mowing, see if he or she will pay you to do it instead of paying an expensive company. You could even clean houses.

Step11

If you got a substantial tax refund last year, go down to your Human Resources department and tell them you need less money withheld from your paycheck. For example, if you got a $3600 refund last year, that means each month you were letting the government hold onto $300 of your money (and they don't give you any interest on it.) Work with your HR department to decrease withholding to the point where you will have a minimal refund.

Step12

Once you are back stable, pay off all the creditors (they may be willing to settle for pennies on the dollar!). Then never go back into debt again.

How to Achieve Prosperity During a Recession

Step1

Visualize success. Yes we are going through something as a country right now but that doesn’t mean that you have to be stressed out and frustrated. Instead, you have to visualize success. See yourself as being more prosperous. Change your mindset and realize that you can be financial secure if you put your mind to it.

Step2

Don’t listen to negativity. Admitting that we’re in a recession isn’t the way to go. Instead, that simply causes you to focus on the negativity. Instead of saying “Yes we’re in a recession, say that our economic situation is getting better and improving with time.”

Step3

Stay away from naysayers. There are plenty of people who are out there who are basking in the glory of negativity. Instead of hanging out with them, you need to get with people who visualize success and prosperity just like you. Yes, you need to pair up with those people who are successful and are actually not feeling the effects of a recession. Once you do this, you will realize that prosperity is all around you, waiting for you to take advantage of it.

Step4

Change your thinking. Everyone in the world is not suffering at this time. Sure there are some who have lost their jobs, homes and are really struggling but there are just as many people who are thriving.

Step5

Make a conscious decision. Decide right now that you will prosper during these times. Then, make a plan on how you will make that happen. For instance, if you’ve currently lost your job, can you start your own business or find an even better paying position? If you’re late with bills, can you get a part time job to get yourself out of debt? In essence, decide what you can do to make your situation better and then get busy doing it.

Step6

In conclusion, many people believe that we are in a recession. However, if you truly want to prosper during these times, you can. Simply relax, don’t listen to negativity, change your thinking and make a conscious decision to prosper. Once you do this, you will succeed.