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Cut Debt Effectively, As soon as Possible

The feeling is all too familiar. You dread going to the mailbox for fear of the number of bills that will arrive. You leave stacks of unopened envelopes on the table afraid to open them. And each night, you lose sleep over how you will get through and make it without losing your home, car or having to declare bankruptcy.

Debt is a scary thing. It leaves many families broken up over the burdens and consequences that come along with owing more than you can afford to pay. Fortunately, not all hope is lost and there are some ways that you can be proactive about taking care of your debt and getting a handle on it once and for all.

Here are a few tips to help you and your family start on the path toward debt freedom.

Hold a Family Meeting

First and foremost, everyone must be on board with your plan to live a debt free life. This will inevitably mean that every family member must make a sacrifice somewhere along the way. Get the family together and discuss the burdens you are all facing by being in debt. This will shed a very real light on what comes next and the importance of sticking to a plan to overcome debt.

As you gather together, discuss specific items each person can cut out of their lives to make an impact on the family budget. For example, maybe you all agree to chip in more around the kitchen so that you can stop eating out as often. Or perhaps you promise to carpool to work to save on gas money instead of taking two cars. Regardless of what you do, holding a team meeting to discuss simple ways to pinch pennies together as a family can help you to reach an agreement of what needs to be done in order to start on the path toward debt freedom.

Pull the Numbers Together

Once you start brainstorming on simple ways to cut back, you need to pull all of the numbers together and make a very realistic estimate of what you can expect in terms of how much you will actually save with each cutback. This will help you to get a more honest image of what your cuts are doing for the family budget and where you may still be able to pinch more pennies or reduce spending.

Go through the numbers together as a family. Measure your debt and put it all together in one total lump sum. Then, decide how quickly you want to pay your debt back. Divide this time by how much you owe and that will show you how much you should be cutting back each month.

Once you have the numbers in place, go through and reevaluate other ways you can cut spending. Try to get creative and think of easy ways to switch out one expensive activity for a less expensive option. With the numbers in place, you can come to a more realistic plan and approach for your spending making it easier to find places to cut back.

Keep each other Honest

While you may walk away from your family meeting feeling positive about the future, there are likely to be setbacks along the way. Your spouse may want to stop at their favorite coffee shop too many times, or your family may slip back into old habits of frequently dining out.

Keep each other honest and help everyone stay on track by standing firm. If you see somebody in your family doing what they once did that caused you to get into debt in the first place, you must hold them accountable. You may even want to come up with a small pre-determined punishment for going back and digging your family into debt further. Keep it fun but also keep it honest as you work your way toward financial freedom.

Debt does not have to hold you back forever. Take charge and take responsibility for your family’s actions. This will help you to regain control over your finances and lead you toward a path of freedom from the burden of debt.

 

About the Author:  Joyce Del Rosario is part of the team behind Open Colleges. It is one of Australia’s pioneer and leading providers of Accounting courses and Bookkeeping Courses. When not working, Joyce enjoys blogging about health and finance.

© 2013 – 2014, Joyce Rosario. All rights reserved.

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