Accelerated Debt Reduction Plan

Accelerated debt reduction is a method to bring your debt under control fast. You might use a debt consolidation company to assist you with this or you could do it yourself. It’s quite easy to do and if you don’t wish to include others in your finances, then there isn’t any need to do so.

The idea is basic, find some ‘additional’ money, such as taking on a second job, then use that money to pay down your debts. Begin with the smallest one while continuing to make minimum payments on the other debts. This technique takes some time and dedication but will soon gain momentum.

When you’ve paid off your first debt then take all the payments you were using on that debt, which includes the minimum payment amount as well as the extra amount you were paying on it and then apply all that amount on to the next smallest debt you have. Just continue repeating this cycle to pay down your debts. Then, by the time you get to your largest debt, you will have a lot of money to help pay off your biggest debts.

While this method is  simple in theory, accelerated debt reduction does require a little planning to get started. The biggest starting challenge for many people is to get a develop a good understanding of their current financial situation. It is necessary to develop clear view of exactly where you are financially at this time.

To begin with, you will need to write down each and every debt that you owe. Once you’ve prepared a  concise list of your debts, also note all other monthly expenses such as utilities, groceries, prescriptions and other ongoing medical expenses, membership dues and subscriptions and so forth. Make certain your list is complete. You might want to look over your bank statements for the past several months to refresh your memory and make sure you have captured all of the information you need. It is important that the list reflects your financial situation accurately.

Next, write down all your after tax income for the month. At this point, subtract your expenses from your income to see exactly where you stand. If you have a positive number this means that you spend less money than you make, a good thing. All you’ll need to do is control your discretionary spending and apply your extra money to getting your debts paid off. But, should you have a negative amount, this means that you spend more than you make. In this case, you’ll have to discover a method to cut your expenses and/or earn more money. When you’ve done that you can then apply that extra cash to your first debt.

This debt reduction method can assist you in getting out of debt although it will require both time and discipline.  This is one the best techniques of accelerated debt reduction because it happens to be easy as well as free. Best of all, if you put your mind to it, you can begin today.

Related posts:

1. Debt Reduction Spreadsheet