How To Reduce Your Personal Debt Fast
Have you seen that bumper sticker: "I owe, I owe
, so off to work I go"? Sometimes it appears that we're working for our creditors. Well, it doesn't have to be that way. By using some practical advice, you can rid yourself from the chains of personal debt. Here are some helpful tips to make it work: 1. Make a monthly budget While this is a reasonably simple task, too few of us actually do it. Write a list of all your monthly expenses, and then a list of your monthly income. Then you'll need to work out where you can "trim the fat." Basically, go with the basics and distinguish your wants from needs. Too often, the distinction between wants and needs becomes blurred because we don't really need a coffee every morning, or a new outfit every month. Here's some food for thought: the richest 20% of the world has 75% of the wealth. 2. Cut up all or most of your credit cards To ensure that you're fully reducing your personal debt, you should demolish all of your credit cards. However, remember when you need to take out a big loan: good credit is better than no credit. You could keep ONE credit card for emergencies. But pay off the bill in full and immediately after you get your monthly statement. Too often interest and late fees charged on credit card purchases cause us to spend two or three times what the item initially cost! 3. Learn about the psychology of advertising Why should you buy a medicine that's endorsed by a person who only plays a doctor on TV? Advertising is a multi-billion dollar business because it's effective. On average, we will have watched two million TV commercials (give or take a few) by the time we reach 65-years-old. While it's not necessary to earn a PhD in marketing, it's helpful to know some of the tricks that advertisers use, in trying to get you to buy items you don't really need. 4. Only carry a minimum amount of cash with you Basically, you can't spend cash that you don't have with you. No, this isn't rocket science. But too often we carry more cash than we actually need. Keep in mind that decreasing the amount of cash you carry shouldn't justify using personal checks or credit cards to make unnecessary purchases. Before heading out each morning, determine roughly how much money you'll need for the day. The operative word is: need. 5. Write down all of your expenses It's the tiny things that add up. So include the smallest purchases as well, including packs of gum and magazines. By retaining a list of your expenses, you can read it, examine it, and then determine where you can reduce your discretionary spending. Most of us have good intentions about controlling our spending, but that's hard to do when we don't keep track of it. While reducing your personal debt can seem daunting, these simple tips can help you to get it done quickly and systematically. Free yourself from debt!
by: Graeme Renwall
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