A Debt Reduction Plan: Four Simple Steps to Help Eliminate Debt

For many Americans, debt is a serious problem. If you are paying on debt every month but are not seeing a debt reduction, it is time to develop a debt reduction plan.

Your first step is to stop using your credit cards. Do not be tempted to purchase anything that you cannot pay for in cash. Cutting up your credit cards is one sure way to stop using them! If that is too drastic, put them in a container and fill the container with water. Now put the container in the freezer. You still have your credit card in case of emergencies, but now it is not convenient to use for your daily purchases.

Your second step is to develop a budget. If you have never made a budget before, it can be difficult to assess how much money you spend and where. It's ok if your first budget isn't perfect. In fact, it will probably take three or four budgets before what is on paper matches your real spending habits.

Your budget does not need to be fancy. You can keep your budget on paper or on a spreadsheet. Free spreadsheet software is available online if you do not own any. If you are tempted to go and buy the newest money software on the market, reconsider this purchase until you have your debt under control. Programs that help you budget can save you time, but if debt is a serious issue you will want to take advantage of free resources before spending any more money.

Start your budget with writing down your income and then all your bills: mortgage or rent, electricity, car insurance, phone bills, and other monthly expenses. If it varies from month to month, use your best guess and remember it is better to set aside too much money for a bill rather than not having enough. After bills, budget for groceries. Finally, budget for the nonessentials.