Tips to Reduce Your Debt

April 23, 2010

Does it seem like debt is all around you? You don’t have to remain trapped by your debt problems. Here is some advice for you to reduce your debt.

Almost everybody has debt. As soon as you buy a car or a house you inherit the debt of the loan. Over time, you pay off those loans until you own your property. But, there are times when we get into more debt than we can manage. Credit cards are an easy way to pay for items when cash is hard to come by. But, eventually you will have to come up with the cash.

Write a debt-free plan. This plan is more than a budget (which we all hate to think about) but a way of making lifestyle changes that will eventually lead to debt freedom. It is not just for you but also your family. Children who learn how to manage debt and finances at an early age will be more likely to avoid debt issues as they grow older.

Here are some highlights of a debt-free plan:

  • Gather your bills – It is important to know what you are working with. How much money do you have to pay out in a month? There are bills that we can’t do without paying unless you want to be sitting in the dark with an empty stomach. Paying these are are your top priority.
  • Eat to live but don’t live to eat – Grocery shopping takes time but also money. It is ideal to make one shopping trip do for the month but if you think about it, you are probably at the grocery store once a week or more. Create a list and stick to it. If the entire family gives their input about what you need around the house it is easier to make one big trip. If you can, buy daily use items in bulk (milk, eggs, bread). You can freeze bread and milk for later use.
  • Decide how you will tackle other debt – If you are being haunted by a credit card payment, take a look at the interest rate. This is more important than the balance. Credit cards with high interest rates increase your balance faster, especially if you miss a payment. Tackle these first with any extra money to get them paid as quickly as you can. Then, move on to the next one.
  • Create a savings account – We all need money for incidentals. An emergency fund gives you that cushion you need. Divide the money you save on bills between credit cards and savings. Usually working on two fronts is counter-productive but in this case, it’s a win-win situation.
  • Are you feeling confined by debt? Break out of the cycle and become debt free.

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