by Kimberly Schiller

Created on: July 19, 2010

Debt can pile a heavy burden of guilt and stress on a person. Especially in tough economic times, the fear of not being able to pay your bills and losing control of your life can be overwhelming. Unfortunately, this fear can make it even more difficult to solve the problem in the first place. If your debt is weighing you down, here are five money saving strategies to reduce your debt and stress.

*Create a budget

Creating a budget is actually relatively simple, and can be a powerful tool for taking control of your finances. Once you know how much money comes in every month and where it goes, the mystery behind your financial issues disappears.

You don't need to be a math expert or buy any fancy computer programs. Simply look at your pay stubs and write down how much you were paid last month. Then make a list of all the bills you pay every month and how much is due. Now as you go through the month, write down everything you pay for, no matter how small. At the end of the month, you will be able to see where your money is going, where you can cut back, and what you can do better.

*Pay yourself first

Chances are, you have now found some areas where you can spend less. Now you need to start saving money for purchases so that you don't have to use the credit cards as often. Determine how much you can spare, and as soon as your paycheck is deposited, transfer this amount to a separate account. To make it even easier, you can sign up for your bank to automatically make the transfer on the same date every month. No amount is too small.

*Make a debt repayment plan

If you are just randomly throwing as much money as you can at your various bills every month, you might be missing out on an opportunity to improve your situation. Look back at the list of monthly bills from your budget, and highlight all the revolving debt you carry a balance on - in other words credit cards and loans. Pull out your statements or log on to your accounts and write down the interest rates for all these balances.

The debt with the highest interest rate is costing you the most money. So pay the most that you can toward that balance every month, and pay the minimum toward all the others. Once that one is paid off, hit the debt with the next highest rate. You will save yourself money, and feel more in control because you have a plan.

*Temporary income and cut-backs

Cutting out unnecessary expenses and getting a second job are time-tested ways to speed up debt repayment and improve your finances.

• 1
• 2
• Next Page >>