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Super Simple Method for Debt Reduction


NCN over at the No Credit Needed Blog dug out from a pile of debt. He now lives debt free and blogs about what he’s learned from being in debt. He’s also the mastermind behind the No Credit Needed Network which I am a part of. A bunch of us have charts over there (bloggers and non-bloggers alike) to keep track of our debt reduction or savings progress. If you get a chance, pay him a visit. There’s good stuff over there.

When Tricia asked for guest posts, I jumped at the chance to contribute to Blogging Away Debt. I’m a big fan of Tricia’s work and I love the fact that she is getting out of debt.

I love simple solutions to complex problems. Here’s my super-simple method for debt reduction.

Stop using your credit cards or borrowing money.

Make all of your minimum payments early or on time.

Pay as much extra towards your debts as you can.

Now, I realize that this sounds “too simple”, but it really does work. Now, as you walk down the path towards debt freedom, you will find yourself learning more advanced techniques for debt repayment. You’ll learn about balance transfers, interest reduction requests, debt snowballs, etc. But if you are just starting out, these three steps will get you out of debt. Here’s why each step is important:

Stop using your credit cards or borrowing money: Unless you stop adding to your debt balances, you cannot get out of debt. Stop using your credit cards and increasing your credit obligations.

Make all all of your minimum payments early or on time: Do not focus on one account to the neglect of your other accounts. Even if you are only “treading water” and not making any real progress, never, ever fail to make your minimum payments.

Pay as much extra towards your debts as you can: Get another job, sell some stuff, get rid of unnecessary expenses. Do what ever it takes to generate additional income and then use that income to pay down your debt.

Thanks NCN for the article! 🙂


  • Reply Quang |

    About making all your minimum payments… last month I had a credit card bill of $20 minimum. I wanted to wait for this $150 in cash to come in from paypal, to pay a lump sum of $150 instead of ‘just the minimum’

    But you kno what happened? I forgot that it was due by the time the lump some came to me! I was late, and was charge a $30 late fee! How pist was I?

    So i am going to pay the minimum early now. Thanks for the advice. =!

  • Reply debtonator |

    The solution to Quang’s problem about missing payment deadlines is to enter a monthly reminder into a desktop
    But if you have lots of debt where scheduling payments (car, mortgage, credit cards, student loans, alimony, etc.) becomes a full-time job (or a mission like Tricia’s), you might consider a complete liability portfolio management service that’s now coming onto the market. Without an upfront fee, you get an assessment of your cash flow, and provided you have consistent income, one fixed monthly payment is automatically applied for optimal elimination of the entire liability portfolio — within 7-10 years.
    This is not debt consolidation which actually prolongs your debt and hurts your credit rating. Think of it like professional advice, much like a lawyer would provide for legal matters, an accountant would dispense on taxes, an insurance broker would offer for risk management or financial planner would give for managing your assets.

So, what do you think ?