How to Reduce your Debt - 2 Steps

Now days most households are struggling with their personal debt, in-fact household debt over the last few years has risen so dramatically that most households are finding it harder each year to cope with their debt. Just paying items like, fuel and electric bills, food bills, mortgage payments etc are getting harder with each passing month.

But there is a way to control your debt and finally become debtfree, it is not as hard as it seems, infact it might sound silly, but the only reason why you are in debt is because of one silly rule that we tend to forget, which is,

We spend more than we earn

To control this debt monster you have to start making small changes to your household expenses, and you will soon notice a difference, you do not have to do any thing that is drastic, just have a plan that you can implement TODAY and each week you will start having more disposable income in your pocket.

To get your self out of your mountain of debt, 3 things have to be in place.

1. have a plan - an expense and a payment plan.
2. start paying of your debt
3. start saving plan, (emergency fund)

One of the most important steps, as mentioned above, is that you need to find a way of increasing your income in multiple ways, in a series of steps designed to get your finances in better shape and to pay off debt faster.

Living within your budget should be the first thing you do, It is vitally important. But it’s only a part of the equation — spending less only gets you part of the way. Earning more gets you the rest of the way.

How can you increase your income? Sure, anyone can create a blog, write an ebook, freelance, write a print book. But it doesn’t always work out for everyone.
The key is to find something you’re passionate about, and pursue that with all of your heart. That might mean educating yourself, and learning new skills. That might mean finding mentors, and starting at the bottom. But when you’re passionate about something, you’re more motivated to learn and to succeed. Really pour yourself into it, and you’ll find a way.

Sart implementing this 2 step approach now to start decreasing your debt

Step 1 : Spend less than you make

Work it out.
Sit down and work out how exactly how much you owe and who you owe it to. Be honest or you'll only store up more problems for the future.

Use a Debt Checker Calculator to determine the total amount of your debt. It can be difficult to confront that total, but it’s critical that you do. so you know exactly how much you owe to the world. Put them in a spreadsheet, with monthly payments, interest amounts, balances, and a running grand total of all your balances. Update it monthly as you pay off debt.

Create Your Plan.
Put the plan for reaching your goal on paper. The Debt-to-Income Ratio Worksheet and Debt Goal Worksheet may help you set targets for monthly expenses such as utilities, groceries, medical costs, household needs, and transportation. Set realistic targets and then try to spend even less. Make hard decisions about how to squeeze more of what you earn from your budget to pay off your debt. Don’t forget to budget for the unexpected, such as household ,car repairs or emergency medical treatment.

Step 2. Getting Rid of Temptation

Cut up store cards.
Store cards charge by far the highest rates for credit, so if you're finding it hard to manage these debts throw away your cards now to avoid temptation.
You'll pay well over the odds for most store cards - it's better to pay cash if you can. For those items you can't pay cash for, shop around for the best deals - the market is competitive, so there are some excellent interest free credit offers around. It is also worth taking a look on the internet as many products are offered there more cheaply.

Cancel the credit card.
Credit cards are extremely tempting, and with the high interest, they can be downright dangerous. It is possible to use them wisely and even profit from using them … however, most people don’t use them that way, it’s better to just cancel the card.

Eliminate non-essential expenses.
This might seem extreme to many people, but you need to eliminate everything you do not need: cable TV, most eating out, going to the movies (except on rare occasions), alcohol, even cigarettes. You need to re-learn what it is like to live frugally.


Finally
Track Your Spending—Using the plan you’ve developed, track your spending carefully so you can look for additional ways to save. The more money you can apply to your debt each month, the sooner you should be out of debt. To get more help with debt and learn How to be Debt Free get more information at this site.

Regards

Alan