If you have lots of debt then you must be hunting for ways to reduce your debt.
Reducing your debt is not that tough, just a bit of dedication and some sought prior planning can help you reduce your debt on your own.
Why pay extra for debt consolidators, if you can do the work yourself?
Here are some easy and simple ways to reduce your debt by yourself by just following these tips.
3 Simple Steps To Reduce Your Debt Fast
Evaluate your debt
For reducing your debt, first of all, you have to evaluate all of your debt.
Gather all your financial documents and print out your annual credit reports. Check where your debt position stands.
This is a very essential step towards reducing your debt and also the one which most people are scared to take.
Take a piece of paper and note down all the interest rates, balances and monthly amount which is due for all of your debts.
Don’t forget to include your personal loans, payday loans, auto loans, credit card debt and all other such debts.
Also, make a note of annual fees which is due on your credit cards.
If you are escaping your student loan or mortgage loan at this point in time then it is fine. Getting all your stuff together is a good way of reducing your debt.
Take a look at your budget
Once you have gathered all the information regarding your debts, you must have a look at your monthly budget.
Make a note of your monthly income after deducting taxation and also deduct your mortgage amount and rent from this amount.
Also deduct insurance, student loan payment, child care expenses, groceries and other monthly utilities.
Once you have deducted all your expenses check out how much income you have left at the end. This income can be used in reducing your debt.
Read: How to establish your investment goals?
If the amount left at the end is very small and cannot contribute enough to reduce your debt considerably then you have to hunt for ways to cut your expenses.
You can cut off your cable subscription or your carpooling for a temporary phase till you are out of your debt.
The more you will pay at the end of the month faster you will be able to reduce your debt.
Also Read: – How to make money online without investment?
Make a plan to reduce your debt fast
If your debt is diversified, then you definitely need a good plan for reducing your debt.
Once you are done with steps 1 and 2, you have the exact amount you can spend on your debt.
Analyze the type of debts you are having and calculate which one has the highest rate of interest.
The debt with the highest rate of interest should be prioritized or should be paid on a first basis.
This can help you save some of the bucks which can be useful in paying other debts.
Once the debt with the highest rate of interest is paid continue the same cycle with other debts also.
Read: 7 financial tips for young 20’s
