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Paying Down Debt

Jan Mayrhofer By Jan Mayrhofer on
Badge: Publisher | Level: 14 | Finances Expertise:

There were those years of plenty not that long ago, when our property values were soaring and our investments were making loads of money, our 401Ks were fattening up fast and life was good. We got into a mindset that involved spending, spending, spending.

The trouble was that it wasn’t cash we were spending, but we were buying on credit. For some reason, at the time, it seemed easy to make the payments on the credit cards and everything was coming up roses! Big ticket items and even our vacations were purchased on credit so that it wasn’t long before the credit cards were all maxed out. The property values fell so that there were no more home equity loans to bail us out of our credit card debt….. And now we have to make adjustments, rethink our spending habits, and get ourselves out of debt so that we can retire some day!

The way to pay off debt is to begin by trimming the budget. There are a lot of ways to do this; it just requires a total turn-around on your spending habits. The new mindset now needs to be not “what can I buy?” but “what can I pay?” If you make it a life priority and stick with a plan it is doable.

Things to cut back on include movie night out, vacations, restaurants, gift giving, fashion, new furniture, and new cars. I’m sure there are many ways every family can find to trim their budgets if they sit down together and take on the challenge as a team. This is a new era and we can’t survive it if we don’t change our old ways.

Use the extra money you have now saved to start paying off one credit card at a time. Try to at least double your minimum payment. Choose any card you want to pay off first. Some experts say pay the ones with higher interest rates first, and some say pay the ones with the smallest balances first so that you can use the money you would have been paying on them to help pay down the next one. Whatever strategy you choose, stick with it. You are going to see results and there will be a light at the end of the tunnel!