Tricks+and+Tips2


 * [[image:http://www.imoneybuzz.com/wp-content/uploads/2008/11/debt.jpg width="173" height="228"]] Strategies for Managing your Already-Incurred Debt**

__Embrace the Word “Budget”__

The best way to start reducing debt is to set up a budget. It's not a punishment; it's a way of knowing exactly where your money goes. You'll need to add up your income and subtract your expenses, then set up a plan

Don't lie to yourself. Be honest about your spending habits and you'll end up with a more realistic budget.

Budget more than the minimum on credit card payments. Paying the minimum is better than nothing, but you wind up paying a lot more in interest as you chip away at the balances.

Start an emergency fund -- a savings account that should grow to at least three months of expenses. Even $10 a week can help if it means you don't have to visit a payday lender two months from now. Without an emergency fund, unexpected costs or loss of income can drive you deeper into debt.

__Create a Plan__

Use your budget to help you plan your debt-reduction strategy. List all of your debts, from the highest interest rate to the lowest. Aggressively pay down the highest-rate balances while making on-time minimum payments on the others. Your budget will dictate how much you can devote to paying down your balances each month.

Also, consider the following tips: - If you have the money in savings, pay off what you can. - Use any extra cash to pay down debts. - Work overtime, or get a second job.

If you can't earn more money, you'll need to spend less. Try these tips: - Eat at home when possible. - Go cash-only. After the bills are paid, allot yourself a certain amount of cash for gas, groceries, etc. When the cash is gone, the fun is done. - Don’t indulge in high-speed cable or internet (go to the library and use the computer there)

__Consolidate?__

As you attempt repayment, the temptation is great to borrow from others in one lump sum. You might be better off paying your debts bit by bit.

Consider consolidating your loans only if you have the discipline to not use your credit cards. Consolidation means you take out one loan to cover all of your existing payments. If you do transfer a balance from a card, destroy that card so you won't be tempted to run up the balance again. (See "10 bad habits that lead to debt disaster.")

Don't use a home-equity loan to pay off credit card debt. Even if the home-equity rates are lower than your cards' interest rates, trouble looms if you run up your balances again.

Don’t borrow from areas that you will regret later on (ie: your retirement fund, your kids college funds, etc)

__Face up to your Credit Cards__ (after the debt it paid off)

Once you're out of debt, how can you stay that way? Of course, stick to your budget. In addition, figure out how to deal with credit cards, which likely got you into this mess in the first place.

Here are some tips to help you do just that: - Stop charging right now. - Cut up all but one of your cards, the one with the lowest interest rate. Use that card only for emergencies. - If you continue to use your credit cards, pay in full every month and avoid interest charges altogether. - Pull your credit reports once a year and check them for errors. - Call your bank and ask for lower rates. - Leave your credit cards at home. Shop with a list and buy only what's on the list; don't be tempted by sale items you don't need. - Don't use retail-store credit cards for the discounts. Chances are that card carries a high interest rate that you'll have to deal with if you don't pay off your balance each month.

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