Reduce Your Debt – Pay With Cash

There is no silver bullet to reduce your debt. It takes work and a change of lifestyle. In order to reduce debt safely you must not fall under the spell that getting more credit cards or taking out another loan to solve a short term problem will not cause even more problems in the long term. You will have to think long term in order to get this done. You will need to stop using credit cards and only pay for things with cash.

First thing you need to do is get out a spreadsheet or a pen and paper and go through all your bills. Don’t forget to add in food, beer, gas, the occasional dinner out, clothes, etc… everything. Write them down and add them up to reveal the total monthly cost of your life. Utility bills are finite, usually, but these can be worked on. Credit card bills will probably only be the minimum payment due but these can be adjusted as well. Mortgages, student loans, and auto loans are long term investments and should be worked in to the equation however, what we are trying to accomplish is to get rid of the high interest credit cards and short term loans which tend to haunt us endlessly, unless we take drastic action focused at getting rid of them once and for all.

Next get out your last few pay stubs (if need be) and write down your monthly income. Subtract the out going amount from the incoming and have a look at what is left. Now think about how much better your life would be if you could just erase just one of these bills. Which ones would you get rid of first. Your best bet is to start with the revolving, high interest credt card bills and the only way to take care of these is to pay more than you have to.

Now you need to look at all those expenses to see where you can cut costs. You may be able to stop using your phone as much, or perhaps you don’t need such an extravagant one that charges extra because it takes photos, or is connected to the internet. You can definitely cut back on eating out at restaurants, or perhaps you could use a bicycle for several of your trips to your friends house instead of using the car.

Yup, it will be tough. Plus you don’t get to keep the money you’ve saved with all this cutting back on expenses because you have to send it to the credit card company. And this will take time to complete. Make it your mission. If you follow through, every month the bills should get smaller and you will be able to pay more on your debts.

The biggest help will be if you stop using the credit cards. From now on only pay with cash. If you don’t have the money in your account, you can’t buy it, whatever it is.

All this will force you to change in ways you never thought possible. You will begin to prioritize your needs. As your debt slowly falls away and you do not compromise your resolve, you will continue to make more progress each month until you are finally debt free.

After you reduce your debt you will have learned what all your unhealthy spending habits are. You will have experienced how credit card interest can create an endless cycle of debt that can suck a person in and keep them down for the rest of their life. Most of all, you will have a few extra bucks to toss around because you don’t have to send them to the credit card companies every month for the rest of your life.