Debt Reduction Techniques

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Thursday, February 5th, 2009 Subscribe To Our Feed

If you find yourself so far in debt that you need debt reduction help, don’t worry. You are not alone. With the right directions, and the desire to pay down your debts, you can turn your finances around.

First Step Toward Debt Reduction

First and foremost, stop relying on credit for ordinary purchases. Put all the credit cards away and pretend you donít have them. Use cash instead of cards. This will give you the discipline you need to differentiate between wants and needs.

Step Two to Debt Reduction: Increase Your Income

Once you have stopped adding to your debt, you need to work on reducing it. This means acquiring enough income to do two things: live by cash and repay more than your monthly minimum payments due. If your spouse doesnít work, consider the possibility of them working at a full or part-time job. You can also consider starting a home based business to supplement your income.

Step Three to Debt Reduction: Live Within Your Means

Donít allow yourself to spend more than you are bringing in each month. Itís so easy to get credit cards and loans that people are living outside of their means without realizing it. Try to build up your income to the point where you can live on cash and free yourself from your long term debt.

Fourth Step to Debt Reduction: Pay More than the Monthly Minimum

You always want to pay more than the minimum amount due on your credit card statements. A good place to start is by designating a specific amount (like 10% or 15% of your income) just for paying down credit cards. Even better would be to make a goal of paying between 3 and 5 times the monthly minimum due on your credit cards. To make sure that you can achieve this, put away some savings every week, even if they seem small. The money will add up quickly, and youíll be able to use it to pay off your debts.

To keep your debt reduction strategy on track, pay your bills early and do not spend beyond your income. If you make payments more than 30 days late, it can actually stay on your credit report for up to seven years. Nowís the time to stop using credit cards, increase your income, curb your spending and pay off those debts!

We often recommend hiring a debt settlement professional to people who come seeking our advice. For those with little time or energy to devote to cleaning up their debt this can be a great idea. An even better idea (and quick way out of debt) is to do it yourself. If you’re interested in that you must check out Charles J Phelan. With this one guide I’ve seen amazing results with my clients!

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