The 3 Step Personal Debt Reduction Method-ca1477

UnCategorized Currently personal debt reduction is one of the primary aims of many people today given the poor economic situation. While most of us know that it’s important to reduce personal debt, some of us have no idea where to start or how to do it correctly and effectively. Hence, I have come up with 3 steps that can be easily used by anyone to reduce their personal debt. 1. Take Note Of Your Spending Habits The situation you’re currently in is a consequence of your spending habits. You’ve probably more than spent your income and maxed out your credit cards and you’re curious to find out where all your money is going. A great technique would be to write down all your expenses over a 2 week period. This may take a while, but it’s very necessary. The first step to personal debt reduction is knowing where your money is going now because only then can you properly address your spending habits to reduce your personal debt. 2. Quantify Your Debts The best and only way you can start reducing your debts is by finding out exactly where these debts originated from and how much they exactly are. By doing this you can identify big debts from smaller debts and debts that come with higher interest than others. The best thing to do is to pay off the debts that charge the higher interest rates first. This way your repayments fall quickly and as a result, your debt will also fall. However, this must be done in conjunction with the third step. 3. Formulate A Budget Once you know your spending patterns and your debts, you can then go on to making a fortnightly budget that will try to eliminate useless spending while paying off debts. Don’t forget that a budget can only be effective if you complete the above 2 steps first. Budgeting is a very important part of any personal debt reduction as it sets out what you are going to spend to the exact dollar so that you effectively start reducing your debt. It’s a skill that everybody should acquire as it just doesn’t help you reduce your debt but also achieve financial goals and eventually financial independence. My only hope is that this article has given you relevant yet important information for reducing your personal debt. By simply applying the 3 steps featured above, personal debt reduction can become a reality for many people. About the Author: 相关的主题文章: