Debt Reduction Planner

It is not uncommon for many households and businesses to have credit card debt. However, with high interest rates and multiple fees, that debt can sometimes feel overwhelming. The following is a breakdown of how to begin to use a debt reduction planner to reduce and eventually eliminate your debt.

Your Finances

Debt reduction begins by knowing where you stand financially. Sit down and evaluate which debt has the highest interest rates and balances.

Budget

In order to create a debt reduction plan that is effective, you will need to have a budget in place for each month. Take into account monthly expenses, as well as having something to set aside for savings.

Tracking

There are numerous types of software to track debt reduction. Microsoft Money and Quicken are some of the more commonly known money management software, and they will help you in tracking your expenses and revolving balances (see Resources below).

Negotiate

The most important part of a debt reduction plan is to negotiate with creditors to see if you can improve your interest rate or have some late fees forgiven.

Loans

For some individuals, consolidating that debt into a personal loan or home equity loan with a lower interest rate will allow them to free up some additional money each month to put forth toward a debt, and track this in their debt reduction planner.

Consistency

While tracking your progress is important, the most important facet of a debt reduction plan is to be consistent each month in making an effort to reach your goal and pay down debt.

Resources

• Quicken
• Microsoft Money