Debt Reduction – A How-To Program
Do you need some debt relief? You are not alone. Here are 5 tips on debt reduction that you can do right now.
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. Figure out ways to increase your income and instead,use only cash. This is the single most effective action you can take.
2 – Never Commit to Spending More Than Your Company’s Income
When you pay for an item with credit because you don’t have the cash, you are committing your business’ future income to pay the credit company. That’s the recipe for 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 – Pay More Than The Minimum Payment That’s Required
An effective way to reduce the debt every week is to take 10% to 15% off the top of the company’s income and use it to pay down 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 some of the payment money every week before the statements arrive in the mail. It is less difficult to set aside a smaller amount over 4 weeks than to try to come up with a big chunk in one week.
Your debt reduction program should also include the strategy of paying more on the highest interest rate card. Another strategy is paying off the lowest balance cards as fast as possible. This will free up more cash to pay against the higher interest rate cards.
4 – Never Pay Late or Spend Over Your Limit
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. Plus, if you pay over 30 days late, your credit record carries that big black mark against you for 7 years – a whopper of a penalty.
Recently a Vice President of a U.S. bank appearing on the news stated that over 24 Billion dollars was paid in interest, late fees and over-limit fees last year on credit cards. I hope you don’t think the credit company minds too much if you go over your spending limit or mail your payment late. They collected billions because of it.
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. Examine where your business’ income is going and reduce all unnecessary expenses that do not contribute to making more money. Before you spend, work out how much money each and every purchase is going to return to your company.
TIP: Continue promoting your your company and its products to everyone – this is one area you don’t want to stop spending on. Just make sure you are getting a handsome financial return on the promotional investment.
Correctly managing the money in a business to make sure it survives takes more than a program to reduce debt, but this is a great place to start. There are other steps in my money management software program that can be taken to increase the business’ income, pay bills on time, have savings for emergencies, increase profitability and pay yourself a bigger paycheck. Who doesn’t want that, right?
Sandra Simmons, President of Money Management Solutions, and creator of the Cash Flow Mojo software, has years of experience helping professionals and private individuals manage their income to eliminate debt.
Debt Reduction – A How-To Program