Investor Jones

When you are facing problems to combat the impulse to splurge, you are not the only person. As per the latest statistical data, the average U.S. citizen carries around $2,900 as credit card debt. In 2008, 1.6 million families in the country filed for bankruptcy. Following are some important steps that would effectively help you eliminate debt:

Step 1. You should not spend more than what you earn. If you go on doing it, you’re asking for trouble. Always cut your coat according to your cloth.

Step 2. Create an emergency fund. You must do it taking into account contingencies like unemployment, divorce or disability. Do it by earmarking three month’s expenditures. Don’t touch it for trivial reasons.

Step 3. Make cash payments frequently. Cut down on your credit card usage and use cash as much as possible for purchases. This would help you eliminate debt faster.

Step 4. Find a financial planner. You can visit the Financial Planning Association or FPA for a licensed financial planner in your area.

Step 5. Write down the names of all your creditors and the respective amounts that you are obliged to repay. This would give you an exact idea about the overall amount of debt that you owe. Get your credit report from a credit reporting agency to ensure that you have not failed to remember any creditors.

Step 6. Communicate with your creditors and try to negotiate. Numerous consumers don’t know that they can get in touch with their creditors and request for reduced interest rates and elimination of late fees or over the limit fees. More often than not, your request would be approved by them since they don’t wish to lose your business.

Step 7. Reduce spending and use your savings to pay off your debts. Always search for techniques to cut down on your expenditures. For instance, if you are a car owner, by refinancing your car loan you can save a lot of money.

Step 8. Make more than the minimum payments for your credit card bills. This would help you pay down the principal quickly and make you debt free. If possible, pay an amount that is thrice your minimum necessary payment.