5 Steps to Reduce Debt

Reducing debt can seem overwhelming at times, but with a plan and a little bit of  patience it can be very satisfying to see those balances go down, and to enjoy more financial freedom! Here are 5 steps to help you reduce debt.

1.Evaluate Your Debt

It goes without saying that the first step to eliminate your debt is to figure out how much you have. Make a list of all outstanding debts including personal loans, credit card debt, your home loan, and any other outstanding debts you may have.

Include you balance, interest rate, and monthly payments for each of your debts. Next, calculate your debt to income ratio by dividing the amount you owe by the amount you make. You should also check your credit report online to compare. If you find incorrect information you can also file a dispute.

2.Stop Adding More Debt

Once you evaluate your debt do not apply for any new lines of credit or add to your debt.  Do not add any new charges to credit cards.

Continually spending on your credit cards adds to your debt to credit ratio so do not use them while you are paying them off.

Make a budget and keep receipts to get an idea of your overall spending and see where you can cut back. You can use any extra money to help pay down your debts.

3. Settle With Creditors

You can do this yourself by calling your creditors and and see if any are willing to settle or help with debt reductions.

You can also contact companies such as Nationwide Debt Reduction Services to help you settle your debt. which has an ongoing relationship with most creditors and will help customize a plan for your unique situation. Many times they can get creditors to settle for way less than the full principal balance of your debt.

Debt settlement may effect your credit rating short term but it’s also a much better option in most cases than filing bankruptcy.

4. Increase Your Monthly Payment

If possible try to pay more than just the minimum on debts monthly. If income is tight you may need to add in extra income. (See below).

5. Add Extra Income

You can take on a second job if possible or add extra income by selling items on eBay, craigslist or even have a garage sale to help pay down your debt. You can also earn extra money by doing freelance work on the side such as, writing, editing, graphic design, or photography work.

There are also many other ways to make money online such as taking surveys, virtual assistant work and more. Just be sure to research the company first.

Reducing debt my seem overwhelming and does take commitment and time, but is very rewarding and satisfying in the end. With a little planning and patience you can be on your way to financial freedom!