Just In Time Lending

If you are like many Americans, a significant portion of every paycheck goes to others.   In fact, due to debt, many Americans are only two or three pay periods away from losing everything.   If you only pay the minimum against your balance, most of the payment is actually interest, which means you could be paying for years.   That money could be yours.   While it may take awhile to eliminate your debt completely, here are two steps you should, take to start reducing debt today.  

First, stop borrowing money.    This may be the most difficult part of your debt-free journey.   Credit card companies and banks have made it very easy and convenient to borrow money.   Quite frankly, it is in their best interest to keep you in debt.   If they can keep a consumer paying only the minimum each month, they can make thousands of dollars over the life of an outstanding debt.    So, fight the urge to borrow money.   Make it more difficult for yourself.   Take your credit cards out of your wallet.   Put them somewhere that you cannot easily get to them.   Use cash wherever possible.   Even if you plan to pay off your credit cards every month, studies have shown that people are more likely to spend money when they use credit or debit cards.

Second, commit to eliminating your debts.   Write that commitment down and post it somewhere visible.   Share it with a friend.   Do something that will create an obligation.   Without a firm commitment, it will be very easy to slip back into old practices.   To motivate you, consider this.   If you make $50,000 per year and could eliminate your $300 a month car payment, that would be the same as giving yourself a 7. 2% raise.   Imagine how much bigger your paycheck would feel if you also had no credit card debt.   Now, imagine your mortgage gone.   In my case, all these added up to around a 50% increase in take-home pay—without having to rely on anyone else but me.   Further, imagine how much less stressful your job would be if you didn’t have to worry about losing your house or belongings.    When you don’t owe money, you are in control.

Truth be told, it is easy to read about reducing debt, but much harder to take action.   However, if you can successfully stop borrowing money and commit to eliminating your debts, the rest of your debt reduction journey can be as easy as setting up an automatic system and watching your debts disappear.