My Debt Relief Plan

Reduce My Debt - 5 Secrets for Success

September 8th, 2007

Struggling under too much debt can be debilitating and painful: the bills, the sleepless nights, and the creditors calling can get to be too much.

Here are 5 easy-to-implement secrets for succeeding in getting out of debt and getting back your peace of mind.

Secret #1: Prioritize paying down high-interest debt over new investments: Getting out of debt is all about making good decisions. Even though making investments might be tempting, you may actually be losing money overall if you have debt that charges interest rates higher than the return on your investment. Try to pay down all of your high interest debt before you make new investments.

Secret #2: Hide all but one of your credit cards: Credit cards are the culprits that get most us into debt in the first place. So, hide all of yours in your sock drawer, but keep your lowest-interest card in your wallet for dire emergencies. However, avoid closing your cards since doing so reduces your debt-to-credit line ratio and could adversely affect your credit score.

Secret #3: Make a monthly budget and stick to it: Each month, pay for your necessities like food and housing first. Then, pay down your debt with whatever is left over, while putting your wants on the back burner for a while. Tip: Try putting a little something aside to reward yourself for special occasions such as having paid down another card completely.

Secret #4: Envision yourself as being debt-free: Every morning when you wake up, image yourself receiving loads of big checks in the mail, made out to you. At the same time, imagine opening up your credit card statement and seeing a big, fat zero balance. Do this every day and soon the images you see in your mind will start to filter into your reality. Try it before you knock it! Mindset is a huge part of becoming debt-free.

Secret #5: Attack your high-interest debt first: Transfer as much debt as possible to your lower interest cards. Then, focus on paying down the remaining debt on your higher interest cards first. You can save hundreds of dollars each month in interest charges just by taking this simple step.

If debt is the disease, being smart about how you handle it will put you on the road to the recovery.

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Entry Filed under: Debt, Debt Relief, Settlements, Debt Reduction, Debt Consolidation, Blog Carnival