A Do-It-Yourself Debt Reduction Program

Do you need some debt relief? You have lots of company in this situation. Here are some tips on how to help yourself.

1 – Stop Using Credit Cards

The place to start is by locking away the credit cards and figuring out how to cut expenses back to function within your income. Work out how to make more income and pay only with cash. This is the one action that jump-starts your program to get out of debt. This step is critical to your program if you truly want to be debt free.

2 – Don’t Commit to Spending Money Your Company Cannot Immediately Pay

When you pay for an item with credit because you don’t have the cash, you are committing your business’ future income to pay the credit company. Then you experience economic slavery. Take a hard look at whether the item you are about to buy is really something that will increase your company’s income, or whether it is just something you want at the moment. If you really need it to produce more income, figure out how to make the cash to pay for it over a short period of time, rather than buying on credit. Find ways to increase the company’s income and use it to pay both current expenses and pay off credit debt.

3 – Always Pay More than the Minimum Payment Required

To be really effective, your program should include using 10% to 15% of the business’ weekly income to pay against the debt. Establish a goal of paying 3 to 5 times what the minimum payment is on every credit card. Set aside some of the payment money every week until the statements show up in the mail. It’s much easier to stash away smaller amounts over 4 weeks than scramble to come up with the whole amount out of one week’s income.

Your debt reduction program should also include the strategy of paying more on the highest interest rate card. Another strategy is to pay off the lowest balance cards as quickly as you can. The money you were paying on those low balance cards becomes available to pay off the highest interest rate cards.

4 – Do Not Spend Over The Card Limit Or Make A Payment Late

Never sabotage your debt reduction program by getting hit with $25 to $39 over-the-limit or late fees plus the interest on those fees. Plus, if you pay over 30 days late, your credit record carries that big black mark against you for 7 years – a whopper of a penalty.

In a news report, a Vice President of a U.S. bank recently said that in excess of 24 Billion dollars was paid in interest, late fees and over-limit fees last year on credit cards. Don’t think the credit card company really minds if you pay late or go over your limit. They make billions when that happens.

5 – Cut Back on Expenses

Reducing debt requires as much cash as possible, as fast as possible. Evaluate where your business’ income is going and cut back on any expenses that do not contribute to increasing the income. Before you spend, evaluate how much money that item is going to return to your business.

TIP: Don’t ever stop promoting your your company and its products to everyone – this is one area you don’t want to stop spending on. Just make sure you are getting more money back in sales from your promotional activities than what it costs to promote.

Correctly managing the money in a business to ensure its survivalguarantee it will survive takes more than a debt reduction program, but this is a really good place to begin. There are other tactics you can use to increase the business’ income, pay bills on time, have savings for emergencies, increase profitability and pay yourself a bigger paycheck. You want that, right?

Sandra Simmons, President of Money Management Solutions, has years of experience helping professionals and families manage their money to eliminate debt. To find out about the Money Management Software she created, visit her website and watch the FREE 5-minute demo video at www.MoneyMgmtSolutions.com

- Sandra Simmons

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