Reducing debt is something everyone knows how accomplish, but only a very few ever can actually succeed in doing it. What strategies will it take to remove that heavy burden from your mind and wallet? Maybe these ten ways to reduce debt could help you meet your financial freedom goals.
1. Organize your finances: Go over all outstanding debts, especially those regular monthly bills that must be paid on time. The best way to organize your finances, save time and not be overwhelmed by paperwork is to utilize a software program. Get one that gives you a simple format for keeping day-by-day track of your bank account, income, spending and bills.
2. Automate your bill payments: If you can comfortably work the software system, the next step is to arrange the process that automatically pays your bills by computer. It should also allow you to keep instant track of income and outgo of your bank account. (Example: quicken.intuit.com)
3. Find ways to economize: Once you have daily computer access to all ongoing information relating to your income and bank account, look closely and frequently at your debts. If they’re beyond what they should be and getting worse, start taking action.
4. Economize on the easy ones first: They could be restaurants, entertainment, transportation and utilities.
a. If you eat out three times a week, make it once or twice.
b. If you go for professional sports events, first-run movies, buy DVDs and attend concerts, get less expensive tickets and/or cut back on frequency.
c. If you live within walking distance of stores and your job, leave the car in the garage several days of the week.
d. Reduce your electric and gas bills by lowering the thermostat in winter and raising it in summer.
5. Cut back on food costs: Whether just feeding yourself or a family, there are ways to pay less, while still maintaining good nutrition. Buy canned and other non-perishable foods in bulk from discount outlets. For weekly fresh food needs, clip coupons from newspapers and online sources to get the best possible prices.
6. Dump the bad habits for good: If the scales tell you there are too many extra pounds on you, cut back on fatty foods, cakes, pies and candy. If you smoke, resolve to quit. Eliminating those two alone can save you hundreds of dollars a year, as well as the need for frequent medical services those bad habits cause.
7. Economize your buying routine: Does everything you buy have to be spanking new, including a big, new gas guzzler? For you next car, check the used market, and you may find excellent transportation and huge savings with a more efficient and cheaper car. Consider buying other used stuff, including home furnishings, furniture and appliances.
8. Reduce credit card spending: Don’t let the little piece of plastic lull you into charging for things you don’t need. Pay cash whenever possible, and the purchases won’t surprise you on bills. If you have more than one credit card, choose the most economical one and dump the rest.
9. Earn more: You can reduce your worries about accumulating more debt by bringing in more money. If there are higher-level job opportunities in your company, apply for them. If higher education is a key to more income, investigate how you can earn a degree or other qualification online or part-time at a nearby college.
10. Pay off long-term loans early: Credit card, mortgage and car payment debts typically accumulate at the rate of 1.5 percent a month, or 18 percent a year for unpaid balances. By the time you pay it off, interest on taking a long-term loan can actually double your original price. The quicker your mortage and other financial burdens are paid off, the less they’ll cost you.
There are many simple and logical personal debt reduction strategies a consumer can take. All it takes is some determination to cut back on the non-essentials.