Reduce Your Debt – A How-To Program
Posted on Dec 26 2007 | Tagged as: Finance
In debt and need some relief? You have lots of company in this situation. Here are some tips on how to help yourself.
1 – Knock Off Using Credit
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 ways to increase your income and pay cash instead. This is the single most effective action you can take.
2 – Never Commit to Spending More Than Your Company’s Income
You commit your company’s future production to the credit company when you pay for an item with a credit card. That is economic slavery. Evaluate whether or not the item will increase the company’s production of income. If the item will increase the business’ production of income, work out how to set aside the cash to pay for it over a short time period instead of whipping out the credit card. Find ways to increase the company’s income and use it to pay both current expenses and pay off credit debt.
3 – Never Pay Just The Minimum Payment Amount Required
To be really effective, your program should include using 10% to 15% of the business’ weekly income to pay against the debt. Set a goal to pay at least 3 to 5 times the minimum required payment on each credit card and line of credit. Set aside a bit of the payment money every week before the statements show up in the mail. It’s always easier to put aside small amounts over a 4 week period than to find enough to pay a big bill all at once.
Paying more on the highest interest rate card is an effective debt reduction tool you should use in your program. An additional tactic is the lowest balance cards as fast as possible. After paying those lower balance cards off, you free up more cash to use on the high 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. In addition, if you pay over 30 days late, that black mark stays on your credit record for 7 years – a harsh penalty to pay.
Recently a Vice President of a U.S. bank appearing on the news stated that more than 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 – Find Ways To Cut Expenses
A requirement of a debt reduction program is more cash as fast as possible to pay the debt off. Evaluate what your company income is being spent on and cut back on any expenses that do not contribute to the production of more income. Before you spend, evaluate how much money that item is going to bring back in to your business.
TIP: Don’t ever stop promoting your your business’ products and services to everyone – this is one area you don’t want to stop spending on. Just make sure your promotional spending is bringing more money back in than what was spent.
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 great place to begin. There are other steps that can be taken to increase the company’s income, pay bills on time, have cash reserves for emergencies, increase profitability and pay yourself more money. You want that, right?
Sandra Simmons, President of Money Management Solutions, has years of experience helping professionals and individuals manage their income to get out of debt. To learn more about the Money Management Software she created, visit her website and watch the FREE 5-minute demo video at www.MoneyMgmtSolutions.com
- Sandra Simmons