The 7 step debt reduction plan does not have to be this “overwhelming experience”. Few people want to deal with a cure to something that is more painful than the ailment? Anyone who is or has experienced mounting debt knows exactly how stressful enough it can be. That is why we developed the 7 steps to debt reduction. Then, when faced with the task of trying to tackle your debt, you will have some practical examples of where to start. Finally, you have to figure out who is and what is right, especially when dealing with debt settlement. For example, there is a major difference between a debt settlement company and a debt consolidation company. To read more about that difference you can read about using this link.
As a result, we have simplified the approach that we hope will point you in the right direction towards debt settlement. After all, sometimes the simplest approach is the most effective. This 7 step plan can help you get out of debt and stay out of debt forever!
- 1.) Spend less than you make. Easier said than done, we know. However it truly is the first step in any debt reduction effort. And there is no getting around it. The only way to get out of debt is to spend less than you make. The key is to somehow make it happen.
- You need to have a working budget or budget sheet. Again, not your favorite thing to do on a Saturday afternoon, however very important to the process of debt reduction. Once you have made your budget, you need to follow it. This can be a killer in the first month or two, however once you see it working, you will pleasantly surprised.
- Understand the difference between good debt and bad debt. Good debt helps you make money in the long run or at least will not help you lose money. Your mortgage and student loans are examples of good debt. Your house usually appreciates over time and an education usually helps you get better paying jobs.
- Choose the one credit card you have that has the lowest interest rate. Make sure the monthly spending limit is within your monthly budget and use this card for emergencies only. Then cut up the rest of your credit cards. Now that you have your lowest interest rate card, never take it with you when you go shopping. Use cash or your debit card only.
- Take all your other bills/credit card debt and add up how much you owe. If it adds up to over $20,000 you are in what we call the “debt trap.” This is where you will need to call one of our professional debt counselors and discuss a deft relief program.
- Contact your other creditors and try to negotiate a lower interest rate. If you have been with the lender for a long period of time with a good payment record, you have a fairly good chance of getting your “good debt” interest rate lowered.
- Make sure you have enough for emergencies. It is great to be aggressively paying off your debt but you need to plan for the unexpected. You don’t want to be on such a tight budget each month that it doesn’t allow for a misstep. You need to be in a position where you can make your mortgage payment or car loan payment.
If you feel a professional debt advisor could help you with a free consultation, please call us toll free at 1-800-890-6658 for a free no obligation quote anytime between 8:00 am and 5:00 pm Pacific Standard Time (PST) or you may visit our “Contact Us” page here to fill out a short form and one of professional advisors will contact you.