The average American family carries over $8,000 in credit card debt alone. Add a car payment or two and a mortgage, and the debt becomes overwhelming. There are many organizations and companies out there to counsel you about how to reduce your debt. However, by learning a few quick and easy methods, and committing yourself to becoming debt-free, you can reduce your debt on your own.
Of course, most debts require you to make a minimum monthly payment on the debt. This would be your credit card bill, car payment or mortgage payment. Every debt that you have also has an interest rate attached to it.
There are two schools of thought on how you should determine which debt to pay down first. Some say that you should attack the debt with the lowest balance first. This is supposed to give the debtor a greater sense of accomplishment by being able to pay off individual debts more quickly.
Others say that you should chisel away at the one with the highest interest rate. Debts with the highest interest rates are the ones that end up costing you the most money in the long run. Therefore, reducing the high interest rate debts first will reduce your overall expenditure.
Debt Reduction Method Two: Consolidate Debt
Debt consolidation can be done in different ways. Of course, you can apply for a debt consolidation loan. This loan is intended to pay off all of your outstanding small debt: usually credit cards and perhaps car payments, depending on how much the loan is for. This is a good idea only if the offered interest rate is lower than all of your other debts’ interest rates.
You can also consolidate debt by utilizing your lowest interest credit card. Pay off higher bills with this card, or transfer balances in order to reduce the interest payments. Applying for a new credit card with a special introductory 0% interest rate on balance transfers is also a great idea. Transfer all of your higher interest cards to this 0% interest card.
Debt Reduction Method Three: Increase Income
Of course, if you cannot afford to pay down your debt with careful budgeting, on your current income, you must find a way to increase your income. Even if you can easily afford the minimum payments on your debt, increasing your income is a great way to reduce your debt quicker.
Getting a second job, even a temporary one, can be a great help to reducing debt. If you do get a second job, make sure to use every bit of income from that job to reduce your debt instead of buying more things you do not need.
If you do not have the ability to get a second job, selling some of your unused or extraneous items at a garage sale, flea market, or online auction is a good idea.
Any extra income that you can generate will help you to reduce your debt quickly.
Debt Reduction Method Four: Attack!
After you have prioritized your debt, consolidated your debt, and increased your income, you must attack your debt ruthlessly. Train yourself to consider debt reduction techniques at every opportunity. Every extra income you have should be put toward debt. Every savings on regular purchases can also be used to reduce debt.
You will have to limit spending and think conservatively. Not only will you be able to reduce your debt, you will get rid of the stress and worry that comes with it.
Once you are in debt, it is very easy to slip deeper and deeper in unless you do something drastic to escape. These methods for reducing your debt are easy to understand and implement. The most important thing you need to escape from massive debt is the correct attitude. Make up your mind to reduce or get rid of debt completely, and you will find a way. These easy methods for reducing your debt can help.
