Debt Payment Strategies

There are many theories that exist for paying off debt. Three basic principles apply for the most effective and rapid reduction. Budgeting and prioritizing a payment schedule, selling something to generate a quick cash influx, or earning more money are some of the best strategies to improving your financial situation and lowering or removing your existing debt.

Budget and Prioritize

Creating a budget is nothing more than tracking your money. If you don't know exactly how much you spend and earn, you're spinning your wheels. The idea is to identify areas of excess spending and reduce them or remove them altogether. To create a budget you need to write down in list format each item you spend money on each month and what the correlating cost is. For specific items like credit cards and loans, itemize them separately, for things of similar nature like entertainment, grocery and the like, you can group them into categories.

Once you have a full scope of your expenditures, list the outstanding balance of each credit card and loan, including cars and home mortgage. Place them in a list of lowest balance to highest balance. This is going to be your priority schedule. Pay all minimum payments on every item except the one with the lowest balance. Pay any additional funds into this account to ensure a quicker payoff. This can be $25 per month or several hundred dollars per month. Whatever the extra amount you can afford, pay it all to the lowest-balance issue.

Once this is paid off, move to the next-lowest item and apply the same principle. This method greatly speeds up the payoff time frame and provides you with a feeling of success and gratification because you can see improvement and progress.

Sell Something

There is billions of dollars worth of goods sold online on eBay or Craigslist every year. Look around your house and see what you have to sell. Something that you consider unnecessary might be exactly what someone else is willing to pay for. Almost anything is fair game, from speakers, lawn equipment, televisions, DVD players, golf clubs, beds, etc. Without much effort, you can find a few items to sell and generate some additional income to pay toward your debt.

Earn More Income

Generating more income is another way to pay off debt. This could be anything from writing freelance articles for money to getting a part-time job to starting a home-based business. Income is not as difficult as it would seem. People are busy and will pay for services provided if you offer something of need and do it well.

Examples:
Writing Internet articles
Mowing laws or landscaping
Neighborhood handyman services
Cleaning service
Car detailing service