How to reduce debt and be debt free

Imagine waking up in the morning and being debt free,  what  a wonderful feeling , follow these sound financial steps and be well on your way to being debt free within a short period of time. Being debt free is all about using budget planners,  let  me show you how to control your spending and use this extra disposable money to slowly but surely reduce your debt.

how to reduce debthow to reduce debt

1.  By using debt free calculators we can work out exactly how much money we need to put extra into our loans and other borrowings, we can then follow these steps to ensure that we reach our target and reduce our debt accordingly. These generally fall into the category of free debt help or alternatively you can search for a free debt calculator.

2. Spending habits generally dictate the way we utilize our disposable income, and we are all creatures of habit, for example most of us will purchase a cappuccino coffee on the way into work, approximately $4.00 or $20 per week,  x 48 weeks  – $960.00, you can quickly see how easily it is to spend money, what you must realize that by purchasing one cup of coffee per day, you have reduced your annual take home pay by $1000.00.

3. The example of the cup of coffee is only to be used as an indication of how easily if we change our spending habits we can become debt free, instead of the cup of coffee, pay that $4 extra onto your mortgage each day, this can also be applied to many other different items we buy on a daily basis, you will be amazed at how easily you can reduce your debt

4.  There are literally 100’s of budget planner softwares and debt reduction softwares, if you can change the way that you pay your payments each month, i.e. instead of monthly payments , try and pay your mortgage fortnightly or even weekly if you circumstances allow, I once had a small apartment that I had purchased and borrowed 200k for the borrowings, my monthly commitment on this loan was around $1200 per month, instead of allowing the banks to dictate how much I paid monthly, I religiously paid $300.00 per week, over the term of the loan this saved me in excess of over 80k. Remember it is to your advantage that you make weekly or fortnightly payments rather than monthly. Even Though the banks won’t tell you this is an option.

5. Debt consolidation is a term that is freely thrown around these days, many companies you hear on radio or TV want you to consolidate you loans and reduce your monthly commitment, that is fine if you are in serious financial difficulties, but what they won’t tell you is that you are just prolonging the pain of paying your bills for an extra 5 or even 10 years. Remember only consolidate your loans if you are truly and deeply in financial troubles. Otherwise work thru your debts and pay weekly rather than monthly.

6. Never ever allow a finance company to determine how much money you will pay back to them on a monthly basis, you are their customer and you will dictate terms to them, if for instance they recommend that you repay $800 per month on a loan, ensure that on the contract that it states that you will make repayments of $200.00 per week , “minimum” on this contract. Why should I do this, simply  the more repayments that you make during a shorter period increase your credit standing within the banking sector and allows you to qualify for lower interest rates.

Follow these simple and straight forward tips to decreasing your debt

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