Debt Reduction

If you have a high balance on your credit cards and/or are having difficulty paying down your credit cards you may be wondering about debt reduction. There are many suggested methods for how to reduce your debts.

The Key to Debt Reduction: No More Credit Cards

The first step in debt reduction is to stop incurring debt, which means stop using your credit cards. You should especially stop using store cards, as they are usually for stores with merchandise you don’t actually need for day-to-day living. In addition, store cards usually have extremely high interest rates.

Cut up your credit cards or, at the very least, take the cards out of your wallet. Put them in a drawer where you’ll forget about them.

Change Your Spending Habits

When buying something, ask yourself whether you actually need it or not. Do this with everything you buy; from necessities like groceries and pet food to items like clothing and shoes. You may find out that you don’t actually need many of the things you charge on your credit card.

Find New Ways to Make Money Stretch Further

Many Americans waste a lot of money, but spending a little time to make your money go a little further may save you a great deal of money that you can put toward your debt reduction.

• Reduce your monthly bills for utilities. Adjust your thermostat to a more cost-effective level. Turn off the lights and television when you leave a room. Stop taking baths or take shorter showers. If your plants can handle it, switch to watering every other day or every third day.
• Try to find necessities at a cheaper price. Switch out brand names for generic. Kids rarely can tell the difference, especially with items like cereal, crackers and cheese. Use coupons when you go to the grocery store. Shop clothing sales, especially for children's clothes. Electronics are often much less expensive during big sales, too - check newspaper ads for the best deals.
• Shop online. Many places offer discounts or deals for shopping online. And other Internet sites offer coupons specifically for online stores. Just be careful of shipping and handling fees: you may not be saving any money after it's all said and done. Try to combine a free shipping offer with an online sale or discount.
• If you’re not using all your minutes on your cell phone, talk to your cell phone company about changing your plan.
• Shop around for deals on insurance. Even minor changes to your health, car and rental insurance may make a huge difference in how much you pay on insurance.
• Go through your house and have a garage sale or eBay items you don’t use anymore.
• Ask for a promotion at work. Statistics state that one in two workers will actually get the promotion and raise they request with the proper research and approach.

Figure out how much you’ve made and saved and then apply that money in a budget designed for debt reduction.

Take Advantage of Direct Payments

Did you know that most of your bills can be paid online directly out of your checking account? You can save thousands of dollars in late fees and be able to budget better using this method.

Talk to your bank or your employer about taking out a percentage of your paycheck and putting it directly toward your credit card payments. The idea behind this is that you won’t spend money you don’t have. If money is spoken for the day you get your paycheck, you may find it easier to work on your debt reduction.

Consider Credit Counseling

Most people feel overwhelmed trying to reduce debt. They often don’t know where to start, how to create a budget or how to change their spending habits. A credit counselor can help you create a plan to get out of credit card debt. They can help you create a budget and possibly consolidate your debt so you're actually paying less each month. If you can’t afford to pay for a credit counselor, there are several non-profit credit counseling agencies such as Consumer Credit Counseling Services that can help with your goal of debt reduction.