It’s a fact that one of the biggest causes of personal debt is the overuse, abuse and misuse of the credit card. Never have acquiring goods and services been so easy, but at the same time, never has accumulating a sizeable and dangerous level of debt been so easy as well. These days, it’s normal for people to have more than 1 credit card which only complicates the debt problem.

However, if you find yourself in such a situation, do not despair, because with a personal finance program you can significantly reduce your debt in 3 easy and simple steps.

Work out how much you owe

Logically the first step to successful debt reduction is by finding out exactly how much money you owe in total. This is essential as without knowing this you will be unable to set mini goals on your way to full debt reduction. If this debt has come from mainly credit card spending, find out how much you owe on each card and the interest rate on each card. When it comes to reducing debt on the card, the key is to pay off the debt of the card with the higher interest rate first. Then you go down to the one with second highest interest rate and so on.

Identify current spending habits

How do you spend your money on a weekly basis? Take a moment to sit down and write all the purchases you have made in the last week. If you can’t remember everything you bought last week, spend the whole of next week writing down every purchase you make. By doing this, you will be to know exactly where your money is going and then move onto the final step of your personal finance program.

Make a needs and wants list

Once you have your list of purchases for an entire week, go through the entire list and identify which ones were in fact necessities (things you couldn’t go without) and which ones were wants or pleasures (things you could go without). It’s absolutely crucial that you are dead honest with yourself during this process. Once you’ve done this, you will begin to realize both how much money you waste and how much money you could save.

From here on, it’s all up to you. You know how much debt you have, you know your weekly spending habits and you know what spending can and should be cut. You’ve got the ingredients for successful debt reduction in your hands right now.

As you have seen, debt reduction can be achieved by everyone. It’s all about putting your mind to it, fully understanding each step and being loyal to a personal finance program.

Tags: personal finance

Label: Simple ways Reducing Debt With a Personal Finance Program