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Ten Steps to Reduce Debt

[Feb 5, 2010.]


Almost every consumer has experienced the gut-wrenching moment of realizing that an unexpected expense or simply mounting bills cannot be paid with the amount in their checking or savings account. Many people manage to resolve the problem with a payday loan, which can bring fast relief and allow them to pay their bills. Often, a same day payday loan can be arranged, which solves the immediate need for funds.

Beyond the Payday Loans Solution

While short term payday loans can be valuable under a number of circumstances, families who find themselves using fast payday loans with greater frequency may need to review their finances and find a way to reduce their debt, boost their income, or both.

Richard Gorham's book, 10 Steps to Conquer Debt, available as a free download from the website debt-to-income.com, addresses the needs of the millions of consumers who struggle with an overload of debt. The site provides simple calculators and other tools that can make it easier to develop a financial plan.

Ten Simple Steps to Lower Your Debt

  1. Recognize that you are in debt because of past decisions and financial troubles. Decide to take ownership of your financial future and take on the challenge of reducing your debt.
  2. Organize your finances and your financial records so you can develop a plan to pay your bills.
  3. Open every bill and bank statement and write down all of your bills, including the minimum payments, total amounts due, and due dates, along with all of your assets that you can potentially use to pay your bills.
  4. Develop a system (or use the tool on Gorham's website) to track your cash flow so you are better prepared when bills are due.
  5. Use a debt reduction calculator to "stack your debt," which helps you decide which debts to tackle first.
  6. Establish a budget that allows you to attack your debt one credit card bill or loan at a time. Some financial experts suggest you start with the credit card with the highest interest, devoting every extra penny to paying that one off first. Others recommend starting with the bill with the lowest balance because you can pay it down quickly, which gives you satisfaction and an incentive to keep paying down other bills.
  7. Try the cash-only method of budgeting, using cash instead of credit or debit cards for all expenses.
  8. Save a small emergency fund so that you won't have to turn to expensive credit cards when a crisis occurs.
  9. Use online bill-paying and automated services to be sure you pay bills on time.
  10. Investigate ways to boost your income.

Try these steps to help turn your debt situation around.


About Author:

Michele Lerner is a freelance writer with twenty years of experience writing articles and web content for newspapers and magazines on topics related to real estate, personal finance, and business.

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