Debt reduction strategy

This article was written by John Frainee, who provides daily financial advice, news, and personal budgeting techniques on his blog at PlainCents.com.

Have you ever been on a jog and found that you reached a point where you felt like you could run for eternity? You gained a momentum that pushed you to keep moving. In finances, it’s a lot like that. The longer you stay in good financial standing, the more natural it will become in your everyday life.

Debt reduction is not always an easy process – especially when you’re first starting out. Maybe you have a car loan that just can’t be shaken. Perhaps you have a mortgage that you think you’ll be comfortable paying for the next thirty years.

If you feel can’t get yourself to start the debt reduction process, you need to take some small steps toward building momentum today. Once you get that momentum headed in the right direction, your task won’t seem so difficult – it’ll just be a normal part of your routine.

What small steps should you take?

Excellent question. Here are some ideas:

  • Gather three months of expenditures to analyze your spending habits. By taking three months and averaging your expenditures, you will have effectively seen where you money naturally goes. Don’t have your old receipts? No problem! Just start today and in a few months (not that long from now, time moves fast) you’ll have the ammo to cut back unnecessary expenditures!
  • Keep a little card in your wallet by your cash that says, “Should I really be buying this?” This reminder will prevent you from liberal spending. This frugality card will serve as a constant reminder to think before you hand over your cash.
  • Read blogs to bounce your ideas off someone else. Nothing has given me more encouragement than fellow finance bloggers who are pursuing the same debt reduction goals as I am. Don’t underestimate the value of another person’s opinion. Find someone who can keep you accountable to the goals you’ve set out for yourself!
  • Get old school with the envelope budgeting system. In our credit-infested world, it can be difficult at first to spend cash for variable expenses such as groceries and entertainment. However, spending cash is a very visual process that can curb overspending – which ensures you’ll have some money left over at the end of the month to throw at your debt.
  • Try something brand new. If your job has gotten you down and not bringing in much money, why not try something new? You know that side hobby you enjoy during your free time? Why not turn that into a business! It just might be the extra income you need in order to knock out that pesky credit card debt!

A combination of these little steps will help you tremendously with your debt reduction goals. There’s no need to go to a debt reduction agency. They’ll just steal (figuratively-speaking) your money and you’ll probably be in the same position you are today.

If you want to eliminate your debt, you must create the momentum to do so yourself. Attack the root of your problem and don’t try silly shortcuts. You’ll feel uplifted when you pay off your first loan and encouraged to tackle the next.

Once you begin your debt reduction strategy and start to see success, it will be time to move on to habit maintenance. The good habits that you’ve developed will need to stay in check so that you don’t slip back into debt. Again, a friend is very helpful in this. Friends can help keep you accountable. Be transparent and let people know your debt reduction goals!

Are you ready to start building momentum? Let’s knock out this debt, shall we? You’ll feel better and have more peace of mind.

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6 Comments
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  1. This is really something that was needed, especially in this economy. I’m going to share this with my friends who just got laid off.

    Just stumbled and submitted your blog to Viralogy. Hope it brings you some great traffic!

    - Jun

  2. Love the Small Steps!! Reminds me of Linda Kaplan Thaler from the Maximum Impact Simulcast a few weeks back talking about The Power of Small. “Keep a little card in your wallet” is such an original tip. What a great idea!

  3. Rhonda

    Thank you Plaincents!!

    Your article was great…..you give easy to understand “plain sense” to
    readers like myself who really need help focusing on debt reduction.
    I’m starting the “small steps” today!

  4. The first step when faced with debts you cannot repay is to face up to the fact that you need help and do not bury your head in the sand. The next is to work out what you have coming into the home and going out. See where you can make savings which would allow you money towards paying off your debts. Following this you need to get help and advice and answers to your debt management questions.

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