Reducing Your Debt
If you have the internet, I’m sure you’ve seen at least one article where some couple paid off all their debt in one year. Is it possible? Sure, but those people gave up a lot of little and big extras to pay down their debt that quickly. Certainly, if you have the willpower and a strong enough desire to do so, you can do it as well, but realize, it means that you are going to give up a lot for that year, and depending on the amount of debt you have and what your income is, even by giving up everything except the bare necessities, you might not be debt free at the end of the year.
The first key to reducing your debt is setting realistic goals that you can meet, so you don’t fail and then feel guilty for not accomplishing those goals. An unrealistic goal would be buying a house with a thirty year mortgage and thinking you can pay it off in a year, unless you paid less than fifty thousand for the house. But buying a house and saying that each quarter you are going to make the equivalent of a house payment and specify that it be applied directly to the principal, and you will reduce the debt on your house and pay it off more quickly. While we are on the subject of mortgages and reducing debt, if you get overtime or bonuses at work, instead of celebrating by buying something you always wanted with that money, use it to pay down your mortgage. Just remember when you include extra money in your mortgage payment, you need to specify that the extra money is to be applied directly to the principle. If you don’t, the mortgage company will simply use it as a partial regular payment.
Another important thing you need to do when you want to reduce your debt, is to not spend money on things you don’t really need. If you have a lot of major credit cards and a credit card for each retail store you shop at, that’s a bad thing. Cut up all the retail store cards, because you can always use a major credit card at those stores if some great sale comes up. With your major credit cards, look at the interest rate on each card, and see which ones have the lowest interest rate. You might even call the companies and see if they will make some special offer to you to stay with them, like reducing your interest rate, or a special deal if you transfer the debt from your other cards over to them. This is known as consolidating your debt. With the right interest rate, you can save a lot of money by doing this. You don’t need more than two major credit cards; one you can have all your consolidated debt on and the other you use only for emergencies.
One of the most important things about reducing your debt is when you are already in debt, don’t increase it. Learn to live within your means and when you spend money, really think whether this is something you need or something you simply want, especially if you would need to buy it on credit. If it is a real need, shop around for the best price, or even consider buying used.
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