Reducing debt
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Reducing debt

How can i reduce my debt ...

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If you are serious about getting out of debt, you need to change your spending habits. I found that the best way to reduce debt is to figure out what is causing you to keep getting more debt. For example, if you are in debt due to an emergency that you could not afford to pay for, you need to set up an emergency savings fund in case this happens again. If you are in debt because you spend more than you make, you need to set up a budget and stick to it! If you cannot live on what you make, then you need to make more money or learn to live with less.

In order to make a budget work, it needs to be flexible. Write down on paper how much money you need each month to live on. Remember to set some money aside for savings, so you have the money for those emergencies if you need it.

You may be tempted by advertisements for debt consolidation loans. Stay away from these! If you really want to get out of debt, the answer is not to take on a different form of debt. I have found that reports show that those who consolidate their credit card debt usually end up adding to their debt later, because they did not make the changes to their spending necessary to get out of debt.

The best way to pay off your debt is to make a plan that will slowly reduce your debt. If you have credit card debt, for example, pay off the credit card with the lowest balance first. Pay as much as you can each month towards this card. If you cannot afford much, at least double the minimum payment each month. On the rest of your debts, pay only the minimum payment for now.

When the smallest credit card is paid off, roll the amount you were paying onto the minimum payment of your next smallest card. This increases the payment to this card until it is paid off. Then you roll the amount you were paying onto the next lowest card, continuing to pay the minimum payment as well. As you continue to do this, you will find that you are paying hundreds each month towards your lowest card. Very soon you will find that all of them are paid off. Once you have reached this goal, stop using the credit cards!

Now it is time to work at paying off your other debts, such as car loans, mortgages, and home equity loans. Use the same process you used with the credit cards and keep rolling over the payments onto the next smallest debt. With a budget in place to curb your spending and savings in the bank to deal with emergencies, you can get out of debt and stay that way! (don)
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