Top Ten Debt Reduction Tips

Debt is one of the biggest causes of stress in American households. If you have found yourself in debt then it can be hard to know where to start. It is time to stop stressing and start taking action today to take back control of your finances.

Here are ten tips to slash your debt fast.

1. Create a household budget: Sit down with copies of your recent credit card and bank statements and work out all your monthly in-comings and outgoings. If you have more money going out than in then you have a problem! Try and classify your spending so you can see where you money is going and look for spending that can either be cut back or eliminated all together. Make sure you build in a budget for extra credit card repayments. If you only make minimum repayments then you will never be debt free.
2. Cut your spending: To get out and stay out of debt your going to have to change your habits. Based on your budget try and cut out spending not required such as pay TV and cut back on other areas such as dining out, entertainment and so on. You need to start living within your means.
3. Avoid new debt: If you are still accumulating new debt on your credit cards then you are unlikely to succeed in getting out of debt. Put your cards away so you can’t use them. Some people even put them in the freezer within a block of ice to stop those impulse buys!
4. Use cash or debit cards: Try switching to cash and debit cards so you can only use the money you actually have in your account. You will soon be forced to live within your means.
5. Consolidate your debt and reduce your interest: To make more of your repayments go towards lowering your debt instead of going on interest payments, try to consolidate your debts with a balance transfer offer.
6. Pay the most expensive debt off first: If you can’t consolidate all your debts then always focus on paying off the most expensive debts first, the ones with the highest APR.
7. Make direct repayments: Don’t get tempted to spend the money you allocate towards extra credit card repayments. Ask your employer if you can have part of your salary paid directly towards paying off your cards. If this is not possible, set up automated payments via Internet banking to transfer the money each time you get paid.
8. Make more frequent repayments: Interest is calculated daily so don’t wait till the due date to pay if you already have outstanding debts. You should pay off what you can as soon as you can.
9. Use some of your savings: If you have funds in a savings account you may find you are better off to use some of those funds to pay off debt incurring a high interest rate.
10. Work extra or sell the stuff you don’t need: If you can create extra sources of income then you can pay debts off even faster. For example, you may be able to do some overtime or extra shifts at work or perhaps try selling off all the things you don’t use very often on Ebay. You might be surprised how much you may have around the house that other people will buy!

All these tips should help you reduce your debt quicker than before and to learn how to live within your means. Credit cards are great when used correctly but you have to make sure you are the one in control.