Friday, December 5, 2008

Debt Advice: Throw Everything You Can At Your Debts

If you are striving to achieve financial freedom but getting nowhere, I suggest you review your debts and start eradicating bad money habits first. Else, any personal financial planning will be futile.

The first step of debt reduction is to be organized and then make a plan or budget to eliminate your debt. Spend the next few months, year, or couple of years living on as little as you can until you are debt free.

Cut out any unnecessary expenses including cable, cell phone (or use a pay as you go phone), excessive eating and going out, etc. If you live in a house that is more than you need, rent out a room, or downgrade to something that will save you money.

Find a way to cut down on your grocery bill by using coupons and buying store brand. Another great way to speed up the debt reduction process is to get a part time job. Make as much extra money as you can. If it’s near the holidays, you are in luck because many department stores hire extra help for the holiday season.

If you can’t get a part time job, offer your skills to other people such as fixing things, baby-sitting, etc.

Throwing everything you can at your debts may sound extreme, but when you get it paid off, you will feel so much better. You will feel less stressed from money collectors harassing you in the middle of the night.

Don’t bother with debt consolidation, just pay off all the debts. Pay off the credit cards with the highest interest rate first. If you can, transfer your balances to the credit card with the lowest interest rate.