Earn money or reduce debt with our advice and tips.

It’s never pleasant to realize that you’re in financial hot water, but pretending the situation doesn’t exist is NEVER the way to deal with the problem. If you’re having trouble meeting monthly payments, find yourself borrowing or using credit cards to meet daily expenses, or have one or more of your credit accounts turned over to a collection agency, it’s time for you to get proactive and bring your debts back under control. Below you’ll find five ways to reduce your debt. Some take time, all take some level of commitment and effort – but it’s worth putting in the time to start cleaning up your debt situation.

1. Develop a budget – and stick to it.
The first step toward getting control of your finances is to realistically assess your situation. Sit down and draw up a budget that takes into account all your income and expenses. First, list all your income. Next, list each of your ‘fixed expenses’, the ones that don’t vary from month to month. Those may include your rent or mortgage payment, your auto loan payment, and your utilities if you’re on a budget plan to pay for them. Next, add in necessary expenses and payments on bills that vary from month to month. Finally, list all your daily and regular expenses for entertainment, transportation and the like. Your goal is to develop a budget that lets you meet all of your monthly fixed expenses, and figure out where you can cut expenses to start paying down your credit card and other debt.

2. Contact your creditors.
Communication is one of your best tools to help you through difficult financial times. Your creditors would really prefer NOT to take stronger measures to collect the money that you owe them. After all, it costs them more money to refer your debt out to a collection agency. As soon as you know that you’re having trouble making ends meet, call your creditors and explain the situation. In most cases, they’ll be happy to work out a modified payment plan that will make it easier for you to meet monthly expenses. It may mean extending the period of your loan, or renegotiating the terms of a loan agreement, but in the short run, it will take the heat off and in the long run, it will save your credit rating.

3. Pay down your highest interest loans.
Pick and choose among your credit card payments and loans. While it’s generally not a good policy to pay only the minimum payment on credit cards and revolving loans and lines of credit, there is one exception. If you have one or two high interest outstanding loans, one of the better ways to get control of your debt is to eliminate them as quickly as possible. By meeting the minimum payments on other debts for a few months, you can concentrate on bringing the balance down on your most expensive loans.

4. Transfer your balances to lower interest loans and lines of credit.
If you have outstanding debt in high interest loans and credit cards, your finances can benefit from moving the balances to a lower interest credit card. Credit cards with 0% introductory rates for six to twelve months are widely available right now, as are low interest balance transfers. Take advantage of one to transfer a high interest loan and pay it down during the introductory period.

5. Get a debt consolidation loan.
A debt consolidation loan makes sense if you are paying on several different debts with varying interest rates. By taking out a home equity loan, second mortgage or other secured loan in the amount of your total debt, you can pay off all your other creditors, and have one monthly payment to deal with. By using a home equity loan to consolidate your debt, you take advantage of a longer payment term and lower interest rates to bring down your monthly payment and free up your resources for savings and other investments.

If you want to reduce the debt that you are dealing with in your life, there are various ways that you can do this task. While it may not be easy to cut your debt, it will be worth the effort in the long run. Here are four ways that you can apply to reducing your debt. Using these methods could also lead to wiping your slate clean of all your debts.

#1 Use Cash Only

One way that you can drastically reduce debt that you have is by using cash to pay for your purchases. If you continue to use your credit cards all the time, you will only build up more and more debt. As the debt piles up, you begin to lose control, and find yourself behind on your monthly payments.

Instead of reaching for your credit card, start buying only what you can afford with the cash you have. Often, this will mean making do with less. But a small sacrifice can prevent financial disaster in the future.

Tip#2 Get Rid of High Interest Credit Cards

If you want to reduce debt that you already have, you need to get rid of those high interest credit cards that you are carrying. Many times, you are barely paying off the interest each month with your payments. But if you get a card with lower interest rate, more of that monthly payment will pay off the original amount you owe. If you need to have a credit card for emergencies, make sure the card is a low interest one so you will not have to pay much interest costs.

Tip#3 Do Not Avoid Your Creditors

Fear may tempt you to avoid bill collectors and credit cards companies who call wanting payment. But you can benefit from talking to them. Often, if you talk to your lenders, you can let them know you are doing your best to pay your bills, but with much difficulty.

The lender may then propose a settlement that could provide some relief from your debts. This could mean offering a lower interest rate or having you skip one or more payments. Creditors like to know that you are working to pay your bills, so take the initiative and talk to them personally.

Tip#4 Decide on a Budget

Another way that you can reduce debts is to come up with a reasonable budget and stick to it every month. This will help you to live within your means so you are not always spending more money each month than you make. Make sure to budget in payments for your bills as well. And if there is any extra money, you may want to pay more on loans or credit cards that have high interest rates.

Families need to work together to reduce debts that you have built up. Usually, there is a way that everyone can help. Whether it is by watching the grocery spending or cutting down on what you spend on movies and entertainment each month. If you want to reduce your debt, it will take work and perhaps even sacrifice. But in the long run, it will be worth it to see your debt come down with each passing month. If you work at it, you will be debt free.

If you want to reduce the debt that you are dealing with in your life, there are various ways that you can do this task. While it may not be easy to cut your debt, it will be worth the effort in the long run. Here are four ways that you can apply to reducing your debt. Using these methods could also lead to wiping your slate clean of all your debts.

#1 Use Cash Only

One way that you can drastically reduce debt that you have is by using cash to pay for your purchases. If you continue to use your credit cards all the time, you will only build up more and more debt. As the debt piles up, you begin to lose control, and find yourself behind on your monthly payments.

Instead of reaching for your credit card, start buying only what you can afford with the cash you have. Often, this will mean making do with less. But a small sacrifice can prevent financial disaster in the future.

Tip#2 Get Rid of High Interest Credit Cards

If you want to reduce debt that you already have, you need to get rid of those high interest credit cards that you are carrying. Many times, you are barely paying off the interest each month with your payments. But if you get a card with lower interest rate, more of that monthly payment will pay off the original amount you owe. If you need to have a credit card for emergencies, make sure the card is a low interest one so you will not have to pay much interest costs.

Tip#3 Do Not Avoid Your Creditors

Fear may tempt you to avoid bill collectors and credit cards companies who call wanting payment. But you can benefit from talking to them. Often, if you talk to your lenders, you can let them know you are doing your best to pay your bills, but with much difficulty.

The lender may then propose a settlement that could provide some relief from your debts. This could mean offering a lower interest rate or having you skip one or more payments. Creditors like to know that you are working to pay your bills, so take the initiative and talk to them personally.

Tip#4 Decide on a Budget

Another way that you can reduce debts is to come up with a reasonable budget and stick to it every month. This will help you to live within your means so you are not always spending more money each month than you make. Make sure to budget in payments for your bills as well. And if there is any extra money, you may want to pay more on loans or credit cards that have high interest rates.

Families need to work together to reduce debts that you have built up. Usually, there is a way that everyone can help. Whether it is by watching the grocery spending or cutting down on what you spend on movies and entertainment each month. If you want to reduce your debt, it will take work and perhaps even sacrifice. But in the long run, it will be worth it to see your debt come down with each passing month. If you work at it, you will be debt free.

Creating a budget is a great idea, it can allow you to take full control of your finances and help you highlight areas where you need to cut back on spending to save yourself money.

However, when creating a budget, many people make simple mistakes and end up damaging their finances further.

So, how can you create a budget and avoid the common budgeting blunders?

·        Don’t forget about your hobbies

It is important to realize that budgeting isn’t just about planning for your essential spending, but you must also plan for your free time too. For example, if you watch soccer once a week, and this costs you $10 a time, you should include this into your budget.

It is surprising how many people actually forget to do this and end up not budgeting for the money they need to enjoy themselves.

·        Don’t spend more than you earn

Although this is obvious, it is easy to forget – especially if you’ve got a credit card. You should keep track of how much you spend – every time you spend. That way, you know exactly how much has gone out of your account and how much you have left in your account.

If you use a credit card to do all your spending, you may find it particularly hard to keep track of your spending. Credit cards allow you to spend money you don’t actually have, which can be a dangerous thing to do and land you in some pretty big debt.

·        Don’t forget your ‘emergency fund’

Every month, I set around $80 aside in case of emergencies that need paying for. If you fail to do this, how will you pay for repairs to your car or home? Or what about if the dog goes into the vets – how will you cover the cost of that?

How much you set aside is up to you, and will depend on your lifestyle and how much you earn each month. Just make sure you set enough aside (plus a little extra) in case something unexpected happens and you need to pay for it.

·        Don’t underestimate your spending on essentials

When deciding how much you are going to spend on food, for example, make sure you are as precise as possible. Don’t just write a figure down without planning it out, because you will probably find that it won’t be enough, and you will be left struggling to afford other things because you didn’t plan properly.

To make sure you get a clear idea of how much you plan to spend, you should write down everything you need to buy from your local store each week, and then use the internet to find out the average price per item.

If you can’t find the prices this way, do a ‘dry run’ at the local store. Just walk round and make a note of how much each item will cost you before you head in and buy them.

When you have the prices, add them up and this will give you the amount of money you will need to budget for food shopping. It’s always best to add a bit more to this amount in case you need to buy other items, and to allow for price rises.

For more information try –

IVA Advisory Centre

Guardian Money