Sinking deeper into debt can present a no-way-out hopelessness. From home loans to credit cards, the average American household carries approximately $18,654 of debt in 2003, not including mortgage debt, according to MSN Money. With careful planning and diligence, however, nearly anyone with a steady income not only can cut back on debt, but also eliminate debt completely.
Monthly Financial Analysis
Organize your finances by making a spreadsheet to track earnings and spending. Free computer programs are available, such as OpenOffice, which allow you to create a spreadsheet to track finances or use a pre-made template. Enter all expenses and earnings. Once completed, you can determine how you're spending your money every month, which will assist you in eliminating debt.
Cutbacks
Find ways to cutback on any unnecessary spending. You most likely will need to sacrifice some luxuries for awhile in order to save money and eliminate your debt. For example, if your average monthly recreation budget is $150 per month, try to reduce to $100.
Balance Transfer Options
Exploring balance transfer options potentially can be the most effective step toward eliminating debt. Many credit cards offer a low-cost or free balance transfer option. New cards will oftentimes offer an introductory period with a low or even 0% APR. By exploring these options for existing credit card or new cards, you can cut down on your monthly interest payments significantly.
Sticking To The Plan
Perhaps the most important part of eliminating debt, and also the part at which most people fail, is sticking to the plan. Eliminating debt can be a painstaking process and may require years of dedication and budgeting, depending on the depth of your debt when you formulate a plan. Once you realize you won't be able to pay off your debt overnight, you can begin to set realistic goals of reducing debt at regular intervals until it is gone.
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