by Susan Fenn

Created on: November 01, 2009   Last Updated: November 26, 2009

Debt is like gaining weight. It's very easy to add on the pounds, but it takes diligence and a focused mind to shed them. With determination and patience even the biggest shopaholic can become debt free.

A great place to start when trying to reduce debt is to write down daily, weekly, and monthly expenses. This practice increases awareness of repetitive, unnecessary purchases. Once aware it is easy to cut back or completely eradicate splurges.

Organization is essential to becoming free of debt. Gather every bill in one location and set one day a month to sort through them. Divide bills into two categories: recurring debt and elective debt. Recurring debt consists of the electric bill, car payment, insurance payment, etc. Elective debt is considered credit card payments, book and movie club dues, and everyday splurges. Once separated, the bills can be listed and a budget created.

Creating a budget isn't a daunting task. Once created it gives the user a necessary tool to curb excess spending. The easiest way to form a budget is to tally all of the bills (both recurring and elective) and divide it by the number of paychecks received monthly. For instance, a worker that is paid four times per week would divide the bill total by four. Once the dollar amount per bill is decided, take a plain, white envelope and write each bill and its due date on separate envelopes. Place the amount that must be set aside each week to pay the bill inside of the envelope. Then hide it in a dresser, under the mattress or box spring, or inside of the cookie jar to take away the lure of spending it. What money is left in the bank account can be used to further eliminate debt.

Credit cards are the number one cause of debt in America. It has become the norm to charge instead of save for the items that consumers want. Credit debt and making minimum monthly payments with increasing interest rates can cripple any chances of eliminating debt. To slay the beast of credit make a list of all of your credit card totals from smallest to largest. Pay the minimum monthly amounts on the second smallest to the largest bills while striving to pay a minimum of $1.00 more a month to the smallest bill. Once the smallest credit card bill has been eliminated start on the next smallest. For this method to work, once the credit card debt has been paid, don't use the card unless you have the money in the bank to pay off the bill entirely at the end of the month. Also obtain a copy of your credit report.

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