Debt reduction plans for paying off debt are as many as the number of so-called financial gurus and debt counselors who are trying to help. But really the onus is on the debtor. Without his determination and persistent effort, no amount of methods will work. Here's an example on how to Unlock The Secrets To Financial Freedom.
There are simple things to consider. One is to pay off the debt that garners the most interest. That way, you get rid of the nastiest debt first. The other way is to pay off the smallest debt first. The advantage of this is that when you succeed at doing this, you will be motivated to do more.
There are plans out there and I will tell you the best two. Remember though that whichever plan you choose to follow, the key is to choose the method and stick to it with all the effort you can muster. Choosing any of the debt reduction plans is not as important as the determination to follow it through as if your life depended on it. It really depends on how badly you want to be debt free.
That said, there are rules to remember to help go through with any of the debt reduction plans to completion. I know it is a bummer to have to follow rules, but without them, we are guaranteed to fail. Whereas, if you follow the rules you have a chance at that freedom that is the ultimate goal. Here are the rules:
1. Don't create any new debt. No debt reduction plans will work without following this rule. But how do we follow this rule? One is by getting a spending plan in place. What is that, you ask? Well, it is just a plan to spend your money with a goal in mind which is to be debt free and not worry where to get the money to pay the bills. Keep a record of all expenses, create a budget from that and eliminate the non-essentials.
The second way to prevent getting into new debt is to have an emergency fund. I know, I know. How in the heck can you have an emergency fund when you owe all this money? Relax for there are ways you can do this. Obviously, you cannot have a full-blown emergency fund but just a small amount while you are paying off your debt will do at the start.
Start a baby emergency fund of say $500 and deposit it where you can't get it out easily and where they pay more interest like at http://www.ingdirect.com Where do you get the money for this? Well, either work more, spend less, or sell things in your house that you do not need.
The third way to avoid creating new debt is by having a freedom account. Anticipate future expenses like for Christmas and car repairs, and deposit small amounts into a no-fee, high-interest account so you won't have to whip out your credit card to pay for any of them.
2. The second rule is to write down all your debts according to interest, amount of debt and how much time until each is paid off. Then it depends on the debt payment method you choose. If you want to pay off the smallest debt first, then put it at the top of the list and write down the rest according to the debt amount. How do you do this?
Well, divide each balance by how much you have to pay currently. The result is the number of months it will take to pay this debt. Do the same with the rest except the mortgage and write down all the debts in order from the least number of months you need to pay each debt. Now you are ready to attack each until pay off time.
3. Ignore the declining monthly payment. Continue paying the same amount as before. This means you are paying more than the minimum due which will lower your debt much faster.
4. When the first debt is paid off, apply the payment you made to this to the second one on your list. Paying the current minimum monthly due plus the amount you have been paying on the previous debt in your list will mean a faster way to get rid of the second debt. Do the same with all the rest.
Oops, I went over my 500-word limit, more than 766 words in fact. I will therefore have to continue this discussion on the next page. There, hopefully I will discuss the two best I know of, instead of one at a time of the two best of the available debt reduction plans.