Most Americans are holding significant amounts of debt. That doesn’t include things like electricity, phone bill, gasoline, or food. The debt that most Americans are being burdened with are mortgages, credit cards, and vehicles. Mortgage payments and credit card debt can consume our paychecks. Unfortunately, most of us don’t get raises that allow hammer blows to this debt.
Debt Reduction Tips
First, create a separate account or have a physical money jar for your project. Each pay cycle (whether that’s nightly tips or weekly checks), ear mark extra money that you’ve previously decided on, by putting it in this separate location. The act of physically setting the money aside in a jar or separate account makes it less likely you’ll spend it.
Next, pick a debt to focus on. This can be the debt that you can eliminate most quickly or the one that causes the most cash flow problems (not including a 30 year mortgage). Once you’ve done this, set aside a little more to pay toward this at the end of the month. If you are experiencing financial trouble, consider a credit card negotiation with your lender.
Once that debt is paid off, take the monthly payment from that debt and stack it on top of the next one in line. That way your cash output for the month remains the same while the pay down on your second debt goes up. This is the hardest part. Many consumers feel that when one debt is paid, they are free to incur another. Technically you are, but it’s generally a bad idea. Once this gets going, it has a snowball effect that is very beneficial for the average 9-5 consumer pay off their debts.