Reduce debt through the snowball strategy

One of the important ways you can reduce – or even eliminate – debt is the so-called snowball strategy. But what is the snowball strategy, you might ask. Well, this is how this strategy works:

• List all your debts on a sheet of paper, starting from the smallest debt going to the largest
• What is quite important is planning to pay the very least the minimum on all your debt accounts. What you want to avoid is getting hit by late fees and a strong and sudden increase in interest rates
• Now check to see how much you have saved to pay off your debts
• Next you need to pay the minimum payment as listed on your lowest pay-off debt and then use the extra money in paying off the debt
• As soon as you paid off your lowest debt, start working on reducing or even eliminating your second lowest debt
• Rinse and repeat until you have paid off all your debts

Although there are several strategies to pay off your debt, this is as good as any, and thousands of people have relied on this system to pay off their debts. It seems to work quite well for quite a few folks, thus it is worth mentioning.

One important use for this particular snowball strategy in reducing debt is for paying off credit cards. Actually it is the favorite method of paying off the credit cards. This way people will stay motivated to pay off all other credit card accounts, while using other strategies might not give them enough motivation to stay on course.

For other debt relief strategies, read this book.

3 ways to reduce personal debt

While generally debt can be a good thing, because it helps with getting that dream house, or car, or vacation, or gets your kids to college, excessive debt is something best to avoid. Excessive debt usually leads to problems such as unexpected costs that come up and you’re not able to deal with;  you run out of money fast; brings you only stress, grief and depression.

There are several ways to reduce personal debt, and here are 3 top ways to do that:

1. Reduce your credit card interest payment – if your interest rates are too high, switch to a credit card with less interest. Also put some of  your bills on standing order, so they are automatically paid, no matter whether the bills are lost in the mail, or you forgot to pay them, etc.
2. Find lower rates on house and car insurance – there are plenty of places to shop around online. Sometimes you get discount if you use the same company for both your car and your home insurance. Use that to your advantage. In some countries if you are above the age of 55 and you are retired, you can get a discount up to 10%. You just need to ask, as not all companies will disclose this information freely.
3. Reduce your variable expenses – there are two types of expenses: fixed and variable. Fixed expenses are those necessary ones that cannot be eliminated, such as mortgage, car loans, etc. Variables are those that you can touch and reduce: food, clothing, entertainment, utilities, vacations. Do you see here at least 2 areas that can be be used to reduce expenses from?

Your goal in doing these steps is to reduce your level of debt, to avoid bankruptcy, credit counseling services and possibly debt collection agencies. You don’t want to go down that road!

For more ways to reduce personal debt, read this book.

Four tips to live debt free

A most important motto that everyone should have in this new century is “the less debt you have, the wealthier (and happier) you’ll be”. The law of attraction is always in action, whether you believe it, or not. And I always say that following the laws in action are a good thing. Afterall, who would want to live in debt, in poverty and struggling every step of the way?

Having this in mind, it is true that a light debt luggage will ensure a more secure future and guilt-free spending on the things you want and the things you need. In the today’s society, living debt free is a feeling hardly known. People just cannot understand the joys of not having debt to darken our days. However, who once tasted the feeling, will never want to go back to living in debt!

Here are a couple of things you can do to start your journey towards eliminating debt from your life, and start saving money in the process:

1. Start tracking your spending habits, and determine the type of budget that suits you. You are the best to evaluate your spending tolerance level. However you need to keep in mind that without self-discipline the best of intentions fall flat. Remember those New Year’s resolutions forgotten after day 6 into the next year?
2. Self-discipline is also good for the following: reduce overspending, stop wasting your money, eliminate ‘compulsive’ from your vocabulary. Eliminating these from your immediate life, will greatly enhance your efforts at eliminating debt from your entire life.
3. Saving money strategies are in the right place here: on groceries, on dining out, make frugal recipes, on reading books (you have a library, right?), frugal gift ideas, cheap holidays, reduce energy costs, save on gas, etc. There are plenty of things you can do every day to save money, which in turn will help you with reducing your monthly bills.
4. Rinse and repeat. Do this every single month. Start tracking your spending, start watching what you’re paying more for what you could pay less, start saving money, and add into the mix a healthy dose of self-discipline.

Using these tips interchangeably will come a long way towards eliminating debt from your life, saving money and becoming wealthier in the process. You don’t have to start big. Do baby steps, but the important thing is, just do it (like Nike says). Don’t procrastinate. Start now, and once you will get into a habit of doing these things, you will wonder how were you able to live with the high debt and guilt all the time before. You will see, it will simply seem unimaginable after a while, like a bad dream.

For further ways to reduce your debt, read this book.

How to Budget Your Money

One of the important aspects of saving money is budgeting it. If you’re spending more than your saving, well, you aren’t doing yourself any favors in your quest to save money! You really need to calculate everything you’re spending, down to the last cent, because as I’ve said before, it all adds up.

But how can you actually budget your money, what are the steps for it? It’s easy to say ‘count your spending’, but not so easy to implement, unless you know what you’re doing.

• Calculate what income you’re getting – not only from your regular earnings, but any other income, such as coming from savings interest, child support (if any), tips, overtime money, anything that is considered ‘extra’.
• Make sure you can identify all your expenses – this includes housing, utilities, taxes, house repairs, extra purchases (cars, computers, etc). Keep every single receipt. Now it is a good time to learn an efficient filing system (buy a cheap binder where you can save all these papers in).
• Now you need to compare your income with your expenses – What is more, income or expenses? If income is more, you’re on the right track. But if expenses are more, this is where the red flag should come up, as this is where you need to start saving big time, by cutting back on extra spending.

Unfortunately there are so few people who ever think of budgeting, which is pretty much why there are so many people in debt. Very few of them realize that they spend too much on worthless expenses, because they are not budgeting and don’t see the forest from the trees, as they say.