Money Matters » Sure Ways to Reduce Your Debt

Sure Ways to Reduce Your Debt

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Surprisingly in our relatively affluent society, debt is a fairly common incursion. To the dismay of many personal financial advisors, many view it as an inevitability of life. That’s because we’re constantly bombarded with expenses, from tuition to transportation to surprises like medical bills. Often, however, it’s this acceptance that we’re going to get into debt that leads us into debt – a self-fulfilling prophecy.

If you find yourself in debt, there are a series of actions you can take to alleviate the pressure. There are not “100% Guaranteed” ways to get out, but there are ways to ease the burden, that, as long as you stick to them, remain committed and vigilant, you can work your way toward reducing—and ultimately eliminating—debt.

It usually starts with a personal introspective, a look inward, to discover and understand your financial relationship with the world. Understanding the decisions you’ve made and the financial situations you’re can help you to chart a course.

Know Yourself. Think about where your money is going. This isn’t all about gathering every receipt you have—not yet. This is a step that many people skip right over in favor of hard numbers and tangible actions. Simply giving your situation the thought it deserves can be a huge help, even if it seems ambiguous. We live in a commercial-driven society, we’re bombarded with ads, encourage to impulse buy, and the less thought we give our financial decisions—past, present, and future—can prove dangerous.

Think about each billyou have, both paid and unpaid (companies love autopay and paperless billing and these are very easy to lose track of, they are conveniences not recommended for anyone in a debt situation). Keep yourself aware of your money flow.

Know Your Finances. Ok, you’ve thought about it. Now, it’s time to get into the grit of it. This is where you move into the hard numbers and look at the flow of your money. Account for every single cent, because it’s true what they say: every cent does, in fact, count. If someone else was in charge of your financial situation (which is very common in divorce situations, as divorce is one of the leading contributors of debt), it’s time to get educated. Take classes, read books, and look online.

Look over financial statements, online and off, gather receipts, bills, and know where your money is going, what you have, and what you owe. Account for everything. It can be overwhelming at first, but once you get organized, it gets much easier and getting organized is generally the biggest hurdle to overcome when assessing your financial situation. Use whatever resources you have at your disposal, whether it’s a pad of paper and a pen or Microsoft Excel. Record everything in one accessible place.

Curb Your Spending. This is on every “get out of debt” list, or it should be. It’s a natural step to debt reduction and, quite frankly, it’s just plain obvious. Have a magazine subscription? Cut it. Cable or satellite? Gone. Going out to or buying movies? Rent from your local library. Making changes can have an impressive cumulative impact and the more you can eliminate the better.

Also, keep various things in mind when you know you have to spend money. Yes, going to the grocery store on a full stomach with help you to buy less, especially stuff you don’t need. But more importantly, writing a list of exactly what you need and will use, will help as well. Just remember to stick to it. There are so many things you can do to reduce spending. Oh, and avoid impulse purchases.

Create a Budget. When you have altered the way you spend and know precisely what’s coming in and what’s going out, you need to put together a realistic budget. Go line by line. Creating a budget is all about creating balance. When you’re in debt wither a little or a significant amount, the best thing you can do is to not let it overwhelm you, but at the same time, you don’t want to make minimum payments. Instead, focus on making the largest payment you safely can.

What does that mean?

Once you develop a budget that covers everything else (such as rent, utilities, food, gas, etc), look at what you have left over. If you can save some and pay toward your debt do both, but if saving isn’t realistic, work on chipping away your debt.

Eliminate Excess. If you live in a house or apartment that requires a significant portion of your income to rent or maintain, it might be time to move. Ideally, it’s best to go smaller and into a place that realistically fits within your budget.

Additionally, consider downsizing other aspects of your life as well, from the car you drive to other toys you might have (ATVs, dirt bikes). Have a garage sale and sell stuff you don’t use or need. You’ll have money to put toward your debt and you’ll have less stuff to worry about.

Get Professional Help.
It’s not always necessary to seek professional guidance when getting out of debt, but it can be useful. If you’re overwhelmed with reducing your debt (and it is easy to become overwhelmed—it’s not an easy task), you can consult with a debt specialist.

People tend to avoid getting professional help in these cases since the debt relief industry has a stigma of being on the seedy side of things. While there are those out there who prey on the financially vulnerable, there are plenty of legitimate customer-driven debt professionals out there who will offer any help you need.

Keep in mind; most of these tips go hand-in-hand with one another. Getting out of debt is a challenge and every person’s situation is different. There will never be a quick or easy solution to debt and if you find yourself in a difficult financial situation, the sooner you change the way you spend, the better off you’ll be in the long run.

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