Reduce Your Debt – Right Now

Not in a rude “you should do this or you’re a schmuck” kind of way. What I mean is that there are steps you can take immediately to reduce your debt even if you don’t think so. Just getting started will give you a mountain of confidence as you reduce your mountain of debt.

Like I’ve said before, driving 10 miles out of your way to save 3 cents on gas won’t help you get out of debt. It’s the big stuff. The gristle. The fat. Ever notice meat when after you cook it? The fat is easy to see and easy to lop off.

Step 1 is to cut out the big items. For me and my household that’s eating out and trips to the bookstore. We also cut out cable television and movie rentals. And, thankfully, our vehicles are paid off.

Step 2 is to have a plan. My wife and I discussed this just the other day. Yeah, we say we’re going to throw down on our debt but are we really? No. We never had a plan other than “yeah, let’s put a bunch of money towards our debt.” It needs to be more than motivational mumbo jumbo. More than words on paper. Make debt payments your first option not the last thing you think about at the end of the month.

Step 3 is to push away from financial cliffs. That means, first, saving for events you know are going to happen throughout the year. Funny how Christmas seems to catch so many of us off guard. Same could be said for anniversaries, birthdays, and other known dates.

Step 4 is to stay motivated. Ok. Now you can bring on the positive mumbo jumbo. One of the hardest psychological aspects of paying off debt (for me) is knowing the money could be going towards something else—savings, a vacation, the ability to get out of a dead end job. That’s why I advocate having a tangible goal at the end of the debt. Maybe you’ll be able to take a vacation. Or quit a job. Or travel more. Pick something that motivates you. Then press on.

Have any other suggestions? What’s been your biggest debt reduction hurdle?

2 Responses to “Reduce Your Debt – Right Now”

  1. Nanci Murdock August 30, 2010 at 8:50 am #

    Great advice Jerret! I would just like to add that when I started to turn my financial life around (about 9 years ago), I became very aware of focusing on the intersection between quality and value. No, you don’t need a pair of $495 boots but if you live in a big winter city (as I do) paying $200 for a great pair of warm boots that will last you 4 years is much better than paying $79 for a low quality pair that will leave with wet feet and might not last the season.

    I have worked to do this with my clothing and larger purchases as well as with my children. The best method so far is to purchase these items at the end of the season when they are sometimes up to 70% off. My winter boots I purchase in March at 50% off and I have something fun to look forward to when November rolls around.

    My husband has a great executive job that requires him to wear somewhat expensive suits. Every year, he buys two or three in January or July at 70% off. Because they are classics, they never go out of style.


  2. Jerret August 30, 2010 at 12:04 pm #

    Hi Nanci.

    Yes, you’re right. There’s a difference between price and value. Case in point. I recently had my oil changed and had the guys change out my wiper blades.

    I bought the “cheap” wipers because I thought they were all the same. After two months, I had to change them out because they, how do I say this, disintegrated?!

    Needless to say, I paid more for the higher quality wipers. I can already tell the difference.