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Debt Reduction - A Program To Do It YourselfSandra Simmons Do you need some debt relief? You have lots of company in this situation. Here are some tips on how to help yourself. 1 - Knock Off Using Credit If you haven't done this one, then this is where to start. Put the credit cards and line-of-credit checks under lock and key, and operate as if you don't have them at all. Work out how to bring in more income and pay cash instead. This is the one action that jump-starts your program to get out of debt. This step is critical to your program if you truly want to be debt free. 2 - Never Commit to Spending More Than Your Company's Income Using credit to purchase something commits your company's future income to the credit card company. That is economic slavery. Take a hard look at whether the item you are about to buy is really something that will increase your company's income, or whether it is just something you want at the moment. If you really need it to produce more income, figure out how to make the cash to pay for it over a short period of time, rather than buying on credit. Find ways to increase the company's income and use it to pay both current expenses and pay off credit debt. 3 - Never Pay Just The Minimum Payment Amount Required To be really effective, your program should include using 10% to 15% of the business' weekly income to pay against the debt. Establish a goal of paying 3 to 5 times what the minimum payment is on every credit card. Stash away some of the payment money each week until the statements arrive in the mail. It's much easier to set aside a smaller amount over 4 weeks than scramble to come up with the whole amount out of one week's income. Paying more on the highest interest rate card is an effective debt reduction tool you should use in your program. An additional tactic is to pay off the cards with low balances as fast as possible. After paying those lower balance cards off, you free up more cash to use on the high interest rate cards. 4 - Never Pay Late or Spend Over Your Limit Getting hit with $25 to $39 late payment or over-the-limit fees on which you'll be charged interest is a sure-fire way to set your debt reduction program back one giant step. Plus, if you pay over 30 days late, your credit record carries that big black mark against you for 7 years - a whopper of a penalty. In a news report, a Vice President of a U.S. bank recently said that over 24 Billion dollars was paid in interest, late fees and over-limit fees last year on credit cards. The credit company may fuss at you for paying late or going over your card limit, but they really don't mind when your mistake makes them billions of dollars every year. 5 - Reduce Your Expenses An effective program to reduce debt requires as much extra cash as possible and as fast as possible. Look closely at how your company's income is being used and reduce all unnecessary expenses that do not contribute to making more money. Before you spend, work out how much money each and every purchase is going to return to your business. TIP: Don't ever stop promoting your your company and its products to everyone - don't cut back on that activity. Just make sure you are getting a handsome financial return on the promotional investment. Correctly managing the money in a business to make sure it survives takes more than a program to reduce debt, but this is an excellent place to begin. There are other steps that can be taken to increase the company's income, pay bills when they are due, have savings for emergencies, increase profitability and pay yourself a higher salary. Who doesn't want that, right? |
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