Debt Reduction
We are currently living in a recession. It may get much worse before it gets better. The smart money is now actively reducing their debt. They know that when times get tough, income declines, and ability to pay debt is severely reduced. You may be feeling that pinch personally.
Here’s the answer. Reduce your debt. Here’s how:
1. List out all your debt and the payments you are making.
2. Highlight the smallest debt balance. It doesn’t matter what interest rate it is, or what length of term it is.
3. Cut back on your expenditures as much as you can and take all the excess funds you have on a monthly basis and apply it to paying off that smallest debt balance. Sell things if you have to, just start cutting into that debt balance as much as you can.
4. Once you’ve paid the smallest balance off, take the money you were applying to that debt, and apply it to the next smallest balance until it is paid off.
5. After that balance is paid off, go to the next smallest balance and apply all the money you were using to pay off the previous debt to the next smallest balance again.
6. Continue to do that until you’ve reduced all of your debt.
You’ll be surprised at how fast your debt can be totally paid off. Most people find they become debt free (including their home mortgages) within 7 to 10 years.
Is it worth it? Well, take a look at the amount you make now in monthly payments. What could you do with an extra $1000 to $2000 per month (which is what most people’s debt load is)? You could save up and pay cash for everything, get significant discounts because of it, and fund a good retirement plan. You could even afford to retire early. Who doesn’t want to do that?
