Debt reduction designed to work will free you from the stress and anxiety that often comes when you owe too much. Learn to write everything down. List our debts, your assets, your expenses and monitor your spending. Keeping a financial journal is even more important in the beginning than trying to develop a budget. Actually, the journal will eventually help you to develop a realistic budget.
Focus on that smallest debt, and then when you get it paid off, start with the next smallest obligation. You can make minimum payments on all of the other accounts, and put your extra money towards getting rid of that smallest debt. Stay focused even if it means you cannot make those minimum payments. Pay something on every debt, but work towards paying off the smallest. You may need to contact the accounts that are really worrying you the most. They will usually work with you. Nothing will be lost by asking.
You need to keep a financial journal. Write down everything that you owe, and do not leave out even a small bill for flowers. You need to see where you are in order to see where you are going. This is a very important step in reducing indebtedness. You may not be ready to do a budget yet, but at least write it all down and later a budget will develop from this journal.
Avoid any temptation to consolidate debts with one exception. Take one offer for a one year interest free credit card. Use that money to pay off other debts who are adding interest. You want to be sure that you pay off this debt before the year is over, and one way to do that, is to apply for another interest fee card before that year expires, if you cannot pay it off. This way you are using your credit to its best advantage.
Consolidation of debts under a new loan is not a good idea, unless you can secure a no interest loan for a year. And you want to be able to pay off that loan before the interest starts being added at the end of the year. Those of you who have good credit may be able to apply for another credit card at the end of the year with no interest, and use that money to pay off the original. Working with credit card companies who offer no interest credit can be a real advantage to you, especially using them to pay off those high interest bills. Just be careful not to allow yourself to go past those deadlines, or you will be trading one problem account for another. Use your credit to your best advantage.
Leave the credit cards at home and learn to live on a cash basis. Prohibit impulse purchases. Reward yourself when you pay off an outstanding debt by making a purchase you’ve put off or even going out to eat to celebrate. Change your habits. Eat at home and learn to save by clipping coupons and shopping at discount grocers, even if it means you cannot buy that brand you prefer. Once you begin seeing the results and experiencing the freedom, you will become even more determined and find more ways to save and reduce debt.
Perhaps, working part time is an option for you in order to increase your income, especially while you are trying to reduce your indebtedness. You may find that even just babysitting or working a paper route will provide the necessary funds. Should overtime be an option, offer. You be the first in line for special projects and let your job help you while you help your employer.
You may need a coach. Perhaps, someone in your family is good with money management, or you can partner up with a friend who is trying to reduce his or her indebtedness. Get some competition going about who can save the most and see results in the shortest amount of time.
Yes, debt reduction is possible. You can do this. Start with a pen and paper, writing down ideas and ways to avoid spending, save money and live frugally. You may decide that even after you’ve made your budget more manageable that you want to continue working these things out and be a smarter shopper and saver. The challenge is yours. When you mess up, forgive yourself and start again. Make this a part of your lifestyle and daily routine. Once you see the benefits, you won’t ever want to stop trying.
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