Which Debt Reduction Strategy Should You Choose?
Living debt free is possible if you are determined to do it and have a plan on how to do so. There is no such thing as the best reduction strategy simply because everyone’s circumstances are different and what works great for one person may turn into a disaster to the other.
Here are some debt reduction strategies for you to consider. Read them carefully and choose which one is right for you. If you choose to use more than one, you will be living a debt-free life much sooner than you think.
Refinance your home. Refinancing your home is a great debt reductions strategy, but it only makes sense if you can lower your interest rate by at least two percent.
Develop frugal habits. Getting out of debt requires some sacrifices, so try to live frugally. Start cooking meals at home instead of going out; skip your morning Starbucks coffee and stop buying stuff just for the sake of buying. We live in a consumer society and it is often hard to say no to 75% off or buy-one-get-one-FREE deals, but if you want to live debt free, you have to be strong and develop self-discipline.
Borrow money from your friends and family. If you have wealthy friends of family who trust you, ask them to lend you some money. If they are willing to help you out and give you the money without asking you to pay interest, consider yourself lucky. Just don’t forget to pay them back later if you don’t want to ruin your relationship.
Get a debt consolidation loan. If you own a home and have enough equity to borrow money from its value, this may be a good option for you. Your interest should be tax deductible (it is in most cases)
Stop using your credit cards. Use debit cards and cash and cut up all your credit cards and throw them away as soon as you pay them off. You may leave one for emergencies, but promise yourself not to use it unless there really is an emergency. Again, self-discipline is the key.
Increase your income if you have to. If you are having a hard time paying off your credit card debt, consider a second job or a side business. You may also try to sell some of your assets. Many people make a living out of selling on eBay. You don’t have to make it your full-time job, but you can make some extra cash to help you pay your debt off fast.
Get rid of your debt mindset. Buying things is not going to make you happy for long, but living a debt-free life will.
