Simple Method For Debt Reduction

BY NCN at No Credit Needed & No Credit Needed Network

When John asked for guest bloggers, I jumped at the chance to write an article.  I am a big fan of Adult ADD and Money!

I like for things to be super-simple.  I created a super-simple method for getting out of debt.  (Please note:  The METHOD is simple.  The WORK is hard!)  The following applies to those of you who  are current with all of your bills.  If you are not current, your first step is to get current.  In April of 2005, I had nearly 12K in debt.  In February of 2006, I was debt-free.  In March of 2006, I had 1K in savings.  In October of 2006, I had 20K in savings.  For those of you who are counting, that's a $32,000 turn-around in less than 19 months.  I used the following super-simple method:

1.  Pay your monthly minimums on all of your credit accounts.  (Auto payment, CC payment, H.E.L.O.C. payment, etc.)
2.  Pay your monthly bills.
3.  Stay on your budget throughout the entire month.
4.  Put as much extra cash into your savings account as you can.
5.  At the end of the month, send a single extra payment (as MUCH as you can!) to the credit account with the lowest balance.
6.  Rinse and repeat.

Note on step 5:  You CAN send the payment to the credit account with the highest interest rate, but I like the psychological "jolt" of paying off those pesky little debts first. 

That's it.  Pay your minimums, take care of your monthly obligations, save up all extra money,  and put it towards your lowest credit balance.  In no time you will be debt-free.

Notes: 
Even when getting out of debt, I always kept a cash-cushion of $1500 for emergencies.
For ANY debt reduction plan to work, you must develop some sort of personal budget! 
When I built up my savings, I used the exact same method, but I didn't have to send any minimum payments to credit accounts, and, at the end of the month, I got to KEEP the extra money that I had saved.

John, Thanks for the opportunity to write an article,
NCN

You can find out more about me and what I do over at:
No Credit Needed

Comments

[jennifer k]

What info were you using to guide you on creating a budget? A book? a web site?
i think i am ready for this phase of the debt reduction, and not sure where to start...
i have about 4 months of very detailed tracking on my spending, so think i can use this info to create a pretty good estimate,
but i still seem to be able to "check out" on when things are due
to be paid, and have no idea how to stick to a budget,

Can you go into more detail on some of your steps? Thanks,
money and ADD, wrangler--JK

[John MacKenzie (Adult ADD and Money)]

Jennifer, if you would like more information about how NCN was able to make his transformation you can find out all of the details at www.ncnblog.com.

[fairdealondebt]

Fair Deal on Debt CIC is a non- profitable organization.We provide services as Fair deal on debt,Debt management,Debt advice,Energy efficiency,Debt counseling,Energy saving,Credit Card Debt,loan schemes,personal loan,trade credit loan scheme,consumer loan scheme,personal loan for salaried women,personal loan for real estate builder,personal loan for pensioners