Sunday, July 27, 2008

How To Reduce Debt In A Nutshell

(How To Reduce Debt In A Nutshell)
Copyright © Sue Young

OK, if you’re reading this article it means you want to know how to reduce debt and you want to know now. So I’m not going to beat about the bush, here are some red hot strategies you can take action with today.

Have A Budget – You Only Need To Do It Once...(ok,every 6 months)
Let’s get real, if you want to know how to reduce debt you need to know where you are right now. If you don’t know what you’re spending or earning, how can you possibly know where the problems are? As for ‘budgeting’ if you think of it in terms of ‘lack’ it will just make starting harder. But if you’re crazily optimistic like me and think of budgeting in terms of abundance, it’ll be easy. Well easier. So how does budgeting translate to abundance? Simple. If you take care not to spend on things you don’t really need, or things you don’t have the cash for (hallo credit card hell) you’ll suddenly find you have a lot of it, cash I mean. You will be abundant. Don’t believe me, have you tried it?

Deal With The Basics And Then Forget Them
Set up automatic payments to take care of regular expenses, that way you won’t forget to pay them or spend the money on something else. Another winning strategy is to work out how much you need to take care of regular expenses such as rent, utilities, car payments, Hire Purchase and so on. By transferring a regular amount from your weekly or monthly wage into a special payments account for these regular expenses, there is less chance that you’ll spend it. And you won’t miss it if you never see it in your regular account, believe me this is a great 'how to reduce debt' trick.

Avoid Any Further Debt – This Is Serious Stuff
Brace yourself…to reduce debt as fast as possible cut up your credit cards. If you don’t want to carry cash then only carry the type of card that’s linked directly to your bank account. That way you can’t spend money you don’t have. And if you’re thinking about a ‘consolidation loan’, then go no further than that. Thinking I mean. A loan like this is no way to reduce debt, it may reduce your monthly payment, but it will blow-out the amount you owe as well as the years it’ll take to pay off. You’ll end up paying far more than you originally owed and will not have reduced debt in any way, quite the opposite in fact.

Make It All Into A Game
See how long you can go without actually buying anything. And try this amazing reduce debt trick. Work out what that pair of gorgeous shoes is really going to cost you. Just how many hours would you have to work to pay for them? Let’s say they were going to cost you $150, a reasonable amount for gorgeous shoes, or is it? Check this out. If you were paid $20 an hour you'd need to work 7 and a half hours to buy those gorgeous shoes, a whole day at work for a pair of shoes. But just a moment, the $20 is your pre-tax hourly rate, so let’s say you pay 25% tax. That means you'll need to work 10 hours to earn enough for those shoes. Doesn’t seem such a great idea now, does it? But we all need treats and we all want things just because, so try this.

Give Yourself A Guilt Free Allowance
Move heaven and earth to ensure that you get your own spending money. Even if you’re on a tight budget you still need some splash money. It’s amazing how even $20 a week, that you can do whatever you like with, guilt free, can liberate you. Blow it every week on trashy magazines or pastries, or hide it away and save up for those shoes. The point is you get to choose. This will definitely help reduce debt as you'll have regular little guilt free splashes.

Create Additional Income
Now this is a great way to reduce debt. A part time job isn't always a necessity to get out of debt, but wow, it can certainly speed up the process. There’s a multitude of part-time jobs available in the evenings or weekends that could power you towards your debt free goal, or you could look at doing something at home. I opted for an internet income as I wanted something that would allow me to visit my overseas family as often as I could. Again it’s your choice.

Whatever you decide to do, do something. Take action as your debt situation is not going to fix itself. So ‘How To Reduce Debt’ in a nutshell, stop making more of it and take control of the money you have got. Good Luck.

About the Author:
Sue Young of has coached many people in the skills of ‘How To Reduce Debt’, she knows that increasing income packs a powerful punch in this process. To learn how you can earn 5 separate income streams visit Income While You Sleep.

Friday, July 25, 2008

How To Reduce Debt 101

(How To Reduce Debt 101)
Copyright © Sue Young

Before we go any further – let’s just pace ourselves here, I think we need to acknowledge that this topic, ‘How to Reduce Debt’, might not inspire a whole lot of excitement, wouldn’t you agree? Part of the reason could be that it sounds like work, and god forbid we should have to do any more of that!!

But sometimes we just have to bite the bullet and get on with it. But again, before we do that, let’s take a sneak preview at your life without those ‘Sword Of Damocles’ debts hanging over your head. Just for a moment imagine a life where you didn’t have anything to pay for except your food, clothes, petrol, power and phone. And on top of that, you CHOOSE where you spend the rest of your money. How do you do that, well you need to kick these into touch for a start…

• Credit Card Debt
• Store Card Debt
• Car Payment Debt
• Personal Loan Debt
• Mortgage/Equity Loan Debt
• Revolving Credit Debt
• Boat or Motorbike Payment Debt

Yes, get rid of them all. But tragically, we’re all so accustomed to having debts like this that it never occurs to us that there’s another option. Or we don’t see how we can get these debts paid off, or manage without our credit cards. So with that in mind you may be asking yourself, how do I reduce debt? Well it can be done, but it’s not going to happen over night. The first thing you need to do is start, and the first place to start is with you. You need to know exactly where you stand as the clock’s ticking on your financial fitness, the longer you leave it the worse it'll be. So with that said - is this you?

You’re buying clothes and entertainment, or things for you or the children that you just don’t need, and you’re buying them with money you don’t have. In other words you’re using a credit card or a store card. Those cards fool you into thinking you’ve got more money than you really do, and they lure you into spending money you don’t have, and money you aren’t going to get. So at the end of the month you simply can’t afford to pay the entire balance off. So what do you do? You stress to the max… “how the heck can I reduce my debt…” , then you roll the balance over to the next month and pay the minimum. But you pay the maximum in interest and fees, yes, we all try and ignore that bit. Those credit card purchases are going to cost you big time. SO STOP DOING IT!

But that’s not the only injury to your financial fitness, are you driving a car that you’re paying off over time, or are you filling your house with things you don’t have the cash for. Just realise this. If you stop making payments on those things you ‘own’, you’ll find out who really owns them – and it isn’t you. If you don’t believe me just stop making payments on your car, the same goes for your house or anything else you have on time payments, hallooo…you don’t own any of those things, you’re renting them. You are renting your lifestyle. Lecture over. But there’s no point in crying over spilt milk, let’s just take some action to get this cleaned up.

Task One: Stop buying things you don’t have the cash for.
Task Two: Pay off the debts you have now, start with the smallest debt first.
Task Three: Create extra income with the free time you have now that you aren’t going out spending money you don’t have. (Sorry bad grammar.)

Yes that is definitely the ‘bite the bullet’ part, but what a great start in ‘How To Reduce Debt’. If you just do Task One you’ll be ahead of the game, and Task Three will help you with Task Two. But it’s not OK to just implement Task Two, you must stop the injuries with Task One, and Task Three can speed you to Olympic financial fitness. Get to it.

About the Author:
Sue Young of has coached many people in the skills of ‘How To Reduce Debt’, she knows that increasing income packs a powerful punch in this process. To learn how you can earn 5 separate income streams visit Income While You Sleep.