Five Steps to Debt Reduction

by Ella Stephen

If you’re like most people, you want to get out of debt now… not tomorrow or two years from now. Because your Visa card is charging you anywhere from 9 to 19% APR, you probably wish you could be out of debt starting yesterday. It’s understandable.
If your debt is not completely insurmountable, and you don’t require the help of an outside agency like Credit Card Debt Consolidators, you may be able to help yourself… starting today.

Want to make a great start to dramatically reducing your debt in the next 24 hours? Try these five steps.

Step 1: Do You Need Multiple Credit Cards?

The problem most clients we take on have is that they carry a lot more than one credit card, and often only carry small balances on many of them. The goal here should be to identify the easiest card to pay off – and pay it off. For the next 3 to 6 months, put all your extra debt-busting cash toward paying down that single card. The resulting feeling from eliminating that single debt will give you a sense of accomplishment – and the momentum you need to perhaps pay down your second smallest card balance, and third, etc.

Step 2: Plan To Succeed

Last year, the average American household with at least one credit card carried an average of about $8,000 in credit card debt. How quickly could the Average American eliminate that balance? How quickly could you or I? You won’t know until you have a plan of action. Understanding the inside and outs of your debts is critical here. Which one carries the largest balance, which has the highest APR, etc. Then decide, using your budget, how quickly you would like to pay it all back. Set a feasible time goal, of say, 18 months, and stick to it at all costs.

Step 3: Don’t Just Talk The Talk

Many people tell themselves and others that they are ready to get themselves out of debt, and are brimming with optimism about the challenge. The question is, are you actually doing anything, or simply talking about it? Some people find themselves providing excuses in the short term, reasoning that they “can always cut back” or will “pay down a larger part of the debt next month”. The problem is, next month often never happens. Walking the walk of debt reduction means you develop a plan, work on it, and stay on it for the length of that plan. Our experience tells us that no deviations from that plan equal no debt.

Another concept foreign to many Americans in this credit-heavy world: If you can’t afford it with cash, don’t buy it! Sticking to this will definitely ensure your debt will be eliminated sooner rather than later.

Step 4: Talk to your Creditors Directly

Rather than pay high credit-card interest rates — which will keep you in debt indefinitely — it is often possible to reduce your debt by calling your credit card companies today, telling them that you’re planning to move your money to another company with a lower rate, and then let them woo you back with lower rates. Because most customer service people are authorized to lower your rates to stave off defection, you may be able to get a rate reduction.

Step 5 Consider Professional Help

It’s a fact: most clients who come to us have modest amounts of debt that never seem to decrease, despite the measures they may take. Some of our clients are also referred by banks because they have difficulties getting mortgages.

Services like Credit Card Debt Consolidators or Debt Management Advisors are often the best choice for consumers. The advantage of these services goes beyond the organizational helping hand they extend. Often, making only one payment can save you hundreds of dollars over the life of your debt.

Although these steps may seem simple, they can be incredibly effective in the long run. But the best step of all: stop spending. Especially on things, you can’t afford with cash.

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