The American economic future looks more than a little bleak. It looks downright frightening in more ways than we care to count. In tough economic times, it is more important than ever to be wise about our spending and even wiser about the amount of debt that we carry. With money getting tight, it is vital to start paying off those debts as quickly as possible. In many ways, this is difficult to accomplish but there are some basic principles that will help pay off debt faster.
Stop borrowing money
One of the easiest and quickest ways to begin the climb out of the debt that we owe is to stop borrowing. Using credit or taking loans is simply taking money you do not have to purchase something that you want. Often, we purchase things that we simply do not need. The American desire for possessions is simply out of control and the purchase of wants far exceeds the purchase of needs. Determine what is a “want” and what are genuine needs. Spend your money only on needs and concentrate the remainders into savings or debt reduction.
Never Borrow more than you can pay that month
Debt is killing the American economy both on a national level and on a personal level. If you cannot stop borrowing money, stop borrowing more than you can pay that month. Credit cards are the largest reason for consumer debt in the United States. There are times when you will need to make large purchases that will you not pay off within a month. Be sure to make a debt payment plan before making large purchases.
When you increase your debt, you are also increasing your interest and finance charges. Before you can ever climb out of the debt pit, you will need to stop digging the hole deeper. By paying off anything you charge within the month, you are eliminating the finance and interest changes.
Cut your expenses
The first thing that needs to happen to begin paying off your debts is to understand what you are spending your money on and cut expense where you can. For example, stop getting the $4.00 cup of coffee on the way to work, pack your lunch instead of going out to eat or even decrease your cable or satellite services. The amount of money you save can be applied directly to your debts to help pay them off faster. Create a system of keeping track of what you save. You could keep your savings in a jar. Each day that you deny yourself by not spending you put the cash into a jar. At the end of the month remove the cash and use that money to help pay your debt.
Earn Extra Cash
One of the simplest ways to help pay down your debts is to earn extra money. Money is tight and extra cash might be tough but the rewards are well worth the effort. There are a number of ways that you might be able to increase your cash flow.
* Work some overtime
* Sell items you no longer use of need
* Get an extra or part time job
* Work some odd or side jobs
* Eliminate some additional unneeded expenses
These simple steps can help you to create additional cash flow and be able to decrease your levels of personal debt in a relatively short amount of time.