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Reduce Debt

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Real Ways to Reduce Debt

Things were looking up, your job was going well, your bank account was growing, and your wardrobe was stylish. Then, the recession hit. You lost your job or had your hours reduced, you had to borrow and use credit cards, and before you knew it you were over your head in debt.

Millions of Americans can relate to the scenario above, and millions more can relate to slight variations of it. Tens of millions of Americans have debt issues they need to deal with, and for African American families the situation is even more dire, since they are far more likely to have incurred high levels of revolving debt.

Here are 5 tried and true methods to reducing that debt and moving toward financial freedom.

1. Know your debt. …show more content…

Don't just list your monthly bills, either. List things you pay for every week like car gas, or every year such as house insurance. When you know what you are supposed to be paying, and when, your chances of actually paying your bills goes way up.

2. Schedule Time. When you pay your bills makes a difference. Monday Night Football, Empire, or Love and Hip Hop don't mix very well with bill paying. Set up a specific day and time that you are going to take out your checkbook or computer and, without distractions, pay your bills. Be committed to keeping this appointment with yourself every week.

Pay before payday. You know what is supposed to go into the account each month. Take your account balance and add in your next paycheck. Then, write out checks to your creditors or schedule e-pay. Don't wait until after you have been paid and the extra large balance tempts you. When the money goes out before you see it, temptation is kept at …show more content…

Divide and Conquer. There are two main schools of thought on paying off debt. One is to attack the debt with the largest interest rate since it costs the most money to keep out there. The other is to choose the smallest debts first and start knockin' them off one by one. Each time you finish one, take the extra money and apply it toward the next debt. Not only will you have less debt, but you will see and feel a sense of accomplishment as your debt numbers drop.

4. Create a Budget. The Huffington Post suggests using the "50:30:20 budget rule". The rule says fifty-percent of your budget goes toward needs like housing, insurance, and transportation. Thirty-percent goes towards wants like clothing, services, and entertainment, and twenty-percent goes into savings. Unless you're in debt-elimination mode which requires you to save less and pay more.

5..Automate Payments. During your pre-selected debt-payment time, set up automatic payments from an on-line banking system. This way, you will not forget to pay your bills. The danger is having a bill get paid when you forget to have enough money in the account to pay it. Overdraft or insufficient balance fees can add up really

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