Accelerated debt reduction is usually advertised by debt settlement companies wanting you to believe that the only way to get rid of debt quickly is to negotiate with your creditors to accept a reduced amount of money as payment for what you owe them.
The truth is there really are ways to create an accelerated debt reduction plan on your own that could see you become debt free as well as teaching you important lessons about financial responsibility at the same time.
Before You Begin
Perhaps the best way to begin working on an accelerated debt reduction plan is to take a good look at your current budget and spending habits. Create a quick budget or write out a list of income and expenses so you know how much you’re spending. If you can see any areas at all where you might be able to cut back your spending, then work on this now.
Many people believe that trying to save 50 cents on a grocery bill is the right thing to do when they’re trying to reduce debt. Instead of worrying about your living expenses, take a look at how much your consumer debts are costing you. If you didn’t have to pay those every month, how much of your income would you have left over for yourself?
Work on finding ways to reduce the amount of interest you pay each month. This could mean catching up any delinquent payments to stop those penalty fees from accumulating. It could also mean consolidating some of the more expensive debts into a lower interest option.
If you have the option, then consider transferring the balance of a high interest credit card over to a low or no interest option. Once your interest costs have been reduced, take advantage of that introductory period to pay down as much of that balance as possible before normal interest rate charges start again.
While it’s not possible for everyone to walk into the boss and demand a pay rise, there are other things you can do to raise some extra cash to get rid of those debts. Millions of dollars worth of regular items are sold every day on eBay. Take a look around your home and put anything you don’t use any more on eBay.
If this doesn’t appeal to you, hold a yard sale and see if you can raise a little cash this way. Not only will you be un-cluttering your home, you’ll be un-cluttering your debts at the same time. Whatever money you raise, put this immediately towards paying down your debt balances. This will give you a huge head start and keep your motivation high.
If you’re managed to reduce your monthly repayment costs, then the best accelerated debt reduction method is to have the discipline to allocate those savings towards making extra payments on your debts.
Whenever you receive a pay rise or a bonus or a little extra cash from any source, put it straight off the balance of your debts. Many people hate this part of the discipline stage, preferring to spend bonuses on treats.
Having the discipline to pay extra money off your debts now and go without those treats temporarily will mean you should have far more money to enjoy every month once those debts and the expensive repayments are gone for good.
Good luck with your accelerated debt reduction journey.
Books on getting out of dept and dept management:
–Dave Ramsey, The Total Money Makeover: A Proven Plan for Financial Fitness
–Suze Orman, The Money Class: How to Stand in Your Truth and Create the Future You Deserve
Image courtesy of Stuart Miles / FreeDigitalPhotos.net
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