Millions of Americans are under the pressure of substantial debt. This debt can come in many forms: student loans, credit cards, bills related to emergencies, mortgages, and so on. If you have a substantial debt, there are some things you can do to reduce it. I personally have more debt than I want to think about, but some of these things listed have helped me get out of the hole.
- Know the damage. Sometimes debt is created intentionally--you want to go to college, so you take out a loan. Other times, we simply keep spending when we want and don't really keep track of the cost. If you want to reduce your debt, you need to know how much debt you have to begin with. So, to begin with, add up all those credit cards, car payments, student loans, and whatever else is on your plate, and see what you really owe. That way, you can see how much work you actually have in front of you and start to plan your attack.
- Don't panic. Sometimes, debt can seem overwhelming. It's so frustrating to watch all of your money go to bills, especially if, after all the money's gone, you still owe more. But panicking and letting the fear and frustration overwhelm you into passivity is only going to make matters worse. Be proactive and don't let your life be ruined by something like money. Yes, it can be scary, especially if your house is on the line or you're struggling to put food on the table, but worrying is always counterproductive, and many people who worry about debt are not in those types of dire straits. Be calm, be proactive, and be optimistic. Have a plan. Pick one debt to focus on ending and then work your way down the list. A plan of action is much more effective than panic.
- Be strict about spending. One reason so many people are in debt is they simply spend more--sometimes considerably more--than they can afford to spend. More money going out than coming in equals debt. It's simple math. So, if you feel your debt is a bit out of control, consider how much you spend, what you spend it on, and how can cut those expenditures starting now. This may mean cutting small things like your morning latte, or doing something more drastic like moving from a big house to a smaller one. Only you can gauge the sacrifices you're willing or able to make.
- Be strict about paying bills. One great way to get into bigger debt is to not pay bills on time. Of course, it's very easy to say "pay your bills on time" and quite another to have the money to do so. We've all had those months where there's not enough to go around. In those cases, see what you can negotiate with the credit card company or the bank. In other instances, though, admit it; we just miss payments because we were too slow to the post office or forgot to go online in time. Don't let yourself get a hiked up interest rate, a big late fee, or an overlimit charge just for not being on top of things. As you try to reduce debts, make a serious effort to pay bills on time.
- Bring in more money. If there were any easy way to do this, no one would be in debt. But it may be that the only way you can really reduce your debt by any great amount is by increasing the amount you bring in. There are many ways to make a greater income--small part-time jobs, selling items you really can't afford, even asking friends or family for an interest-free loan.
- Save for the future. Okay, I know, it sounds crazy. I'm suggesting you pay your bills--on time--and take a big chunk out of individual bills one by one, and save? If you're anything like me, that can be next to impossible. But the truth is, many of us got into debt in the first place because we spent more than we had. If we stop spending too much, there's nothing to say an emergency still won't pop up and force us to shell out a lot of cash. If we don't have any cash--even a little--on hand, then we will have to revert back to credit, which will put us back into debt. So, following that logic, it pays to put just a little away every week, and more if possible, so next time you need cash, you'll have it.
Being free of debt is a great feeling. Or so I've been told. Someday, I hope to experience it myself. In any case, there are ways to reduce your debt, to get back on track, and to gain control over your finances again. We all have to work for our money, but our money should also work for us.