Debt Reduction (cont.)

<< back to Reducing Debt pt.1

Have a plan

You’ll make much more headway into paying off your debt if you have a plan of attack that you can adhere to (or try to). Creating a budget is a powerful way for you to analyse your spending habits and to help you formulate a plan of attack for maximising your payments against your debt.

Obviously your plan of attack needn’t be etched in stone because circumstances can and do change from day to day, week to week and month to month. Use it merely as a guide to help you as you go, and revise it where necessary if you think it is too hard to adhere to, or too easy. But no matter what plan you devise, the basic formula will always be the same – spend less money than you earn.

Set goals and objectives

Because the road to paying off your debt is likely to be a very long one, it’s a very good idea to set yourself short term goals that you can aim for. Not only will this help you to stay focused more easily on your objective, but it’s also very good from a motivational point of view. As you attain each short term goal, give yourself a little reward as a further incentive to reaching the next goal. Don’t set your goals so high that they are impossible to attain, as failure to do so will likely result in a complete abandonment of your debt reducing efforts, and you could actually end up compounding the problem out of frustration.

If you do miss some of your short term goals, don’t let that affect your long term objective. You will have some weeks that are better than others, and it will always seem like life is trying to derail you with unexpected bills and expenses. Stay focused, and if you do happen to miss one or two short term goals, let that be even more motivation for achieving the goal the next week.