6 Quick Tips to Reduce Debt

Why make reducing debt more complicated than need be? Follow REALTOR magazine’s strategic tips to ensure you are on the right path to a financially healthy life.

Step 1: Assess your debt. Separate good debt (debt that will produce a return in the future or at least is deductible) from bad debt, such as credit card debt. Pay bad debt off first.

Step 2: Set a monthly financial goal. Grab a calculator and find out how much money you need each month to return to stable financial ground. Be aware that this may require cutting expenses or obtaining an additional source of revenue. Don’t damage personal relations by relying on friends and family for credit, and don’t draw money from your retirement savings or stop funding your retirement.

Step 3: Identify smart savings. Analyze which cuts you can make that will not damage your household or business. Canceling cable might be okay, but falling behind on a car lease could very well make your situation worse. As you minimize, slowly increase the amount of money put towards savings and paying off debt.

Step 4: Plan ahead. Maintain social and professional networks so that you will always be aware of new revenue opportunities. Be conscious of what you will need to replace or renew over the next five years (is your car on its last legs?) and figure out how much you should save annually to finance that transaction.

Step 5: Prepare for the worst. Ask yourself what you would do if your situation worsens, for example if you get demoted. Having the solutions to how you would adapt in worst case scenarios is comforting.

Step 6: Make saving a habit. It might be difficult, but it will pay off when you see your debt decrease and your savings increase!

Watch this brief YouTube clip for additional information: