Small Changes Can Have a Big Impact Reducing Your Debt

Getting out of debt isn’t easy. Staying out debt is harder still. But it’s not impossible. If your monthly bills are getting more and more difficult to manage- you are not alone. The average American is now carrying approximately $16,000 in overall credit card debt. Add to that mortgage or rent payments, auto loans, and normal living expenses, and it’s easy to see why so many consumers are overwhelmed with debt and have no idea how to stop the runaway train of overspending and under saving.

It’s important to remember that you didn’t accumulate all of your debt overnight. You may have been dealing with your financial problems for many months or even years. Getting out of debt is a slow, steady process so you shouldn’t expect any quick fixes. However, the idea of living debt-free should provide great motivation for you to get your financial house in order.

The odds are you aren’t even sure how much debt you are in. You just know it’s a big number and you can’t seem to handle it. The first thing you need to do is make a list of how much you owe, to whom you owe it, and what the terms are (interest rate). You can write a simple list showing the name of the creditor, your outstanding balance, your monthly payment, and your interest rate. Sometimes seeing the numbers written down in black and white can be a shock. But you have to know what you owe in order to plan your budget to get out of debt.

There’s a saying that goes “when you’re in a deep hole, stop digging”. This is especially true when it comes to money matters. To get out of debt, you have to stop increasing the amount you owe. This means putting away the credit cards and learning to operate on a “cash” basis. The same holds true for gas cards and department store cards as well. If you literally need to cut them in half, then do it. Keep one (with the lowest interest rate) and put it in a safe place for “emergency use only”. Get help with credit card debt. Whether you’re $3,000 in debt, $10,000 in debt, or managing over $10,000, it is possible to get your credit card debt under control and eventually paid off in full.

Little things do add up. Taking baby steps is a good way to learn sound financial habits that will make a big difference in your life. To have more money to put towards your outstanding bills, you have to increase your income. This can be as simple as doing things for yourself that you would normally pay someone else to do. Consider washing and detailing your car rather than taking it to an expensive carwash. Get some exercise by mowing the yard. Stop using the dry cleaners for items you can wash at home. The point is, money is money. And the more you can save from one area, the more you will have to put towards your bills.

Think of ways to earn some extra money. Maybe your schedule would allow for a second, part time job. Perhaps you could work an extra hour to bring home additional income. If you have an attic (or garage or storage space) that is full of “treasures” you will never use, have a yard sale or sell them over the internet. Again, you’re looking for ways to bring in more money and cut back on what is being spent.

Be careful when shopping. Impulse buying can quickly undo all the positive changes you’re making. Ask yourself if you really need this new item (“want” does not equal “need”). Follow the 24 hour rule- give yourself at least a day to consider the purchase. Usually the initial “rush” of buying something new will have faded. You may even begin to feel empowered by making good decisions about your money. This is a positive change and one that will benefit you in the long run.

Try to use cash for your purchases. Research has shown that people tend to spend less when using cash than when using a credit card. The simple act of counting out the money for what you are buying can have a sobering effect on your spending habits. If you can’t afford to pay cash for something, the chances are that you can’t afford it, period.

Make an honest budget. If you budget $100 for gas every month but you spend $200, that’s not a budget. You have to be realistic when putting down the numbers. There are ways to cut down on expenses such as food, entertainment, etc. but if your job demands your driving to and from work every day, don’t underestimate your fuel costs.

Many people sometimes consider a debt consolidation loan as a way to ease their financial burden. Learn more about this option and how it will affect your credit rating.

Getting out of debt takes time and determination. Don’t give up. Learning how to manage your money wisely is one of the best things you can do for yourself. Not being controlled by debt offers a lifestyle which is free of the worry and constant aggravation of massive debt. Your energy can be focused on more pleasant things!