Reduce your Debt

If you have come to the realization that you need to reduce your debt, it is time to take action. Having debt looming over your head can be a harrowing experience; once you have acknowledged your problem, all you need to do is roll up your sleeves and get to work.

Do you have the newest car in the neighborhood? Do you stop for a five dollar coffee every morning on your way to work? Do you shop for groceries without a list, without coupons, and with a credit card? You simply cannot afford to continue living this way if you truly want to reduce your debt. Think of it this way: when you used your credit card or signed for that car loan, you were obligating your future earnings. Now it's time to pay.

This may seem like common sense, but if you are used to whipping out your credit card every time you make a purchase you may have some problems switching to cash or a debit card. There are several good reasons to eliminate credit card use, but the two most important ones are as follows:

• You won't incur more debt
• You will probably be more careful with your spending if you're using cash instead of credit.

Even if your credit card bills are sky-high, at least you will be able to take solace in the fact that you aren't adding fuel to the fire.

If you are serious in your quest to reduce your debt, you might want to find ways to bring in some extra money to pay the bills down. Perhaps it is time to seek out a second job, or maybe you should start selling off some of the items in your home which you don't use. One person's trash is another person's treasure, so you may be amazed at the cash your children's outgrown clothes or your old comic book collection might bring in.

This suggestion is tricky, because not everyone should cash in their savings to pay down debt. If your savings account is your life savings, don't cash it out. If you will probably continue to spend with reckless abandon after liquidating your savings, don't cash it out. It's a different story if you have plenty of money in savings for emergencies even after paying your debt off, but if paying your debt means you have no money to fall back on in the bank then you should leave your money where it is.

Do you know where your money goes every month? If you actually sit down and compose a budget you may be a bit startled to realize that you have no idea where a good chunk of your money goes every month. By establishing a formal personal budget, you force yourself to stick to a plan for your money, and to also get a better idea of what you are spending it on. You may be surprised to find that you actually have more money than you thought you did, and you can put this newfound cash straight towards your plan to reduce your debt.

Paying down debt really isn't all that much fun. It involves sacrifice and hard work. Imagine, however, how great it will feel as you start to pay off your accounts one by one, until one day you finally pay off your last account. Keep your eye on the prize, and don't allow yourself to get discouraged.

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