How to Squash your Debt

Do you feel like you are spinning your debt wheels? Despite your best efforts, you just can’t make a dent in that debt?

Barring getting a higher-paying job, here are some ideas on how to eliminate that debt more effectively.

Pick a Card, Any Card

Generally speaking, it’s hard to focus on more than one task at once. The same goes for debt management. Think of filling a bucket. If you put a few drops in a series of buckets, than you don’t accumulate very much. If you combine those drops into a single bucket, now we’re talking!

Do the Math

Beyond your budget for living expenses (rent/mortgage, food, etc.), determine how much you need to apply toward minimum payments for your debts.

Any amount above and beyond that is your “debt payment fund”.  Take that amount, and commit to applying it monthly (in addition to any extra cash you come across) to either your highest interest bearing card or the card with the highest balance.

Commit to Cash

Once you’ve set your budget, physically take out cash and set it aside to cover expenses. It may help to use a series of envelopes labelled with each expense.

This will not only help you to be better able to manage your money, it will provide greater incentive to be creative and shop wisely with the money you have (sales, pre-planning, coupons, etc.).

Cut up the credit card in question to eliminate temptation.

Put it in Writing

While actions speak louder than words, words can be a great motivator for actions. Actually write your plan down- in detail. Sign it, as a promise to yourself, and post it in various locations around your home (and in your wallet). Visual reminders can be very effective.

Talk to your Creditors

Another way to eliminate your debt is to talk with your creditors or bank. You never know-they may be willing to alter payment terms, offer alternative interest rates or offer to consolidate your debts.

Lenders often look more kindly on borrowers who are being proactive in managing their debts before they become insurmountable.