- 1). Determine how much money you have to spend each and every month. Write down the payments that must be sent in each month (such as utilities, food cost, car payments and mortgages). These are bills you must pay, in full, each month. Subtract this from the amount you earn every month to see what you have left to help pay down debt.
- 2). Avoid buying new products you do not need. Purchase thriftily and opt for store brands instead of name brands to save a few extra dollars on the grocery bills. Be vigilant about using grocery store coupons.
- 3). Purchase items with cash instead of credit cards. You are less likely to spend more than what you have on hand then when using a credit card. This also reduces the amount you must pay on the monthly credit card bill, and avoids any new interest charges.
- 4). Pay extra money towards high interest rate credit cards or loans. Typically a credit card has the highest interest rate. Because of this you need to pay it down before turning towards a mortgage or student loan. Pay the minimum needed on the mortgage and student loans but pay extra towards credit card balances. This saves you hundreds, if not thousands, of dollars in the long run.
- 5). Contact credit card companies and ask for a lower interest rate as you cannot afford the current high rate. Credit card compnaies are typically very helpful in terms of working with you (as they do not want you to default on the payments). This can also work with student loans (however the payment period is also extended).
- 6). Discipline yourself and your family to reduce all unnecessary spending, and use that money to pay down debt. If you go out to dinner once a week, change that to once every other week. The same can be done with other "luxuries", such as going to the movies, renting videos, and buying music CDs. Don't cut out these activities completely so that saving money is a fun challenge, not a burden.
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