Debt Free Living 101 - Three Steps To Build A Debt Repair Fund

By Author: Samantha Dale
Total Articles: 610
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Debt repair is not complicated once you create a fund to wipe out outstanding expenses on your credit reports. Credit repair funds are great sources for making settlement payments or setting up automatic withdrawals to collection agencies. Taking control of your financial woes means monitoring spending habits, eliminating unnecessary expenses and opening a savings account.

Monitor Spending Habits

Personal values are a factor in understanding one’s spending habits. By monitoring your financial records, you can see where your money is going and how you can change it. It will not be an easy transition unless you are ready to make that change. Without understanding the whole purpose of your debt repair, you will continue to spend money on useless items. Begin monitoring your spending by keeping a small journal listing all purchases. Every purchase must be recorded for verification of each cent.

Eliminate Unnecessary Expenses

Unnecessary expenses include daily coffee purchases, junk foods, and excessive splurges in department stores. You will have to confront your spending habits in order to correct ...
... them. One of the best exercises to attempt is to not spend money for 24 hours. Some people find that it is hard because they have acquired destructive money habits over their lifetime. You may find that you can make your own coffee or share the pot at work instead of spending $3 per cup every morning. The $3 may not seem like much, but let’s consider the real numbers behind it.

Convenience Store Purchase of Coffee
$3 for 5 days every week = $15/week
52 weeks x $15 per week = $780/year

Grocery Store Purchase of Coffee
$4/30oz container 1 per week = $4/week
52 weeks x $4 per week= $208/year

There is a significant difference in the amount of money you will save by brewing your own coffee at home prior to work. Compare the overall cost of convenience store coffee to grocery store purchases and you will save $562 in one year. The $562 can go towards outstanding debts on your credit reports instead of a convenience store profits.

Open and Fund a Savings Account

Savings accounts are your cornerstones for completing your debt repair fund. Accumulating interest on your funds can help decrease the time necessary to eliminate your outstanding debts. The first step in finding a good savings account is comparing annual interest rates versus daily accumulation of credit unions. Search for institutions covered by the FDIC to ensure your savings remain covered in case there is a problem. In order to know or calculate the interest gained by a savings, calculate the principal (P), rate, and time.

Example: I = P r T
I = (562)(.052)(3)
I = 87.67

You can earn $87.67 by starting your savings account with a 5.2% annual interest rate over three years. It may seem like a long time to earn the money but it can be used to repay your debts. You have the ability to change the way your credit reports are seen by potential employers and mortgage brokers. Face the music so you can explore the joys of debt free living.

My Site Offers Free Information and Resources on the subjects of debt reduction and how to improve credit. These tips and suggestions are designed to give you immediate answers and help.http://www.snlprofits.com/blogs/debt-credit/