The Debt Reduction Diet

by: Gina Cannady | April 19th, 2016 | Personal Finance
In a report by the Federal Reserve and U.S. Census, the average debt in the U.S. is $144,283 per adult over age of 18. Also according the Federal Reserve U.S. debt grew by 3.3% in 2015, while income grew by only 1.7%.

In short…we are all need a Debt Reduction Diet.  

While it is easy to state that we are all in debt…it is harder to understand how to begin our Debt Reduction Diet.

  1. Stop Creating New Debt.

    Easy Right? As Americans we have become used to and rely on credit. Want to go out tonight? Swipe the card.  Like a newer car? Trade in and roll in the negative equity. Want that dream vacation? Personal loan. The hardest part of reducing current debt is to eliminate the easy use of existing credit.

  2. Weigh the Cost

    What do you owe? Is it for a car? Home? Education? Do you still have the thing on which you owe money?

    What is the True cost? When you factor in initial cost, taxes, finance charges, even annual fees…what did it truly cost?

    When do you borrow money? Do you swipe your card more at the end of the month? Do you impulse shop during the holidays?  Track your spending and get to know your spending habits.

  3. Not Using It? SELL, SELL, SELL. Look around you to see if you are hanging on to things that can be sold. Don’t need it? Sell it and use the money to pay down debt.

  4. Tip the Scales in Your Favor.  Can you get a lower rate on your insurance by bundling? Can you refinance your home and/or car and save money? Brown-bag it to work and stop paying so much for your daily lunch.  Look for ways to save - then use the savings to pay down your debt.

  5. Make a Diet Plan. What is your goal? How will you attain it? Are you going to bundle your insurance products? Will you and your spouse use only one car and save on gas? Which debt do you want to eliminate first? Make a plan. WRITE IT DOWN.  Put your plan in a visible place to remind yourself everyday.

  6. Use the Diet Plan.  You have gone through all of the steps - now you have to actually live the plan. Start slow and build up. You will see results once you being to live the Debt Reduction Plan everyday.

Reducing personal debt takes dedication, time and patience. However with personal debt in the U.S. growing faster than personal income, it is a necessary path we all need to travel. Start slow. Stay on the Debt Reduction Diet. And you will see results.

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