Getting out of debt has been a project we’ve been working on for a couple of years. When I was in college and getting ready for marriage, I realized I wanted to get my credit cards paid off. I focused my attention on earning a bit more and putting it towards the credit cards . I was determined to get married without having a huge amount of credit card debt over my head. I was happy to accomplish my goal, but there was still more debt to conquer.
After I got married, my husband and I had a plan to pay off the car loan faster. We worked at it and were proud to finish that. Now we’re shopping for a reliable used car for our family and paying cash for it.
Our next debt to tackle is the student loan we consolidated a bit ago. Though the interest rate is low, we really want to improve our monthly cash flow in the long run. This year we’re making regular payments and whatever extra money we make online to reduce the loan further. We’re also sending in a bit of our tax refund to knock it down even more.
Debt Reduction in 3 Steps
If you’re looking at reducing your debt in 2012, here are a few steps you can take:
- Learn the Exact Amount of Your Debt – Some people think that this goes without saying, but many times people who are deep in debt, don’t know this number. Gather all your statements and add up the total to see how much debt you need to eliminate.
- Set Up a Payment Plan You Can Keep – If you can be gazelle intense until the last cent is paid, then please do so. It’s the quickest way out of debt. If you can’t, then adjust your spending to a point where you can build a debt snowball and sustain it until the debt is paid off.
- Find Ways to Reward Your Achievements – As humans we all need incentives to do something. For some people seeing the numbers go down on their debt is motivation enough to continue. For others, though, you have to create a frugal reward system as you pay down each of your debts. You might want to throw a party at your house (provided you cook the meals or have a potluck) after paying back your family member or friend that money you owed her for a bit. You could also buy a video game (single game; used) when you finish paying off that store card.
Thoughts on Tackling Debt
I’d love to hear your thoughts. What tips do you have on keeping your finances in check? I hope you can join in the discussion; I know many of you have some wonderful thoughts on reducing debt.