There are two forms of debt; good debt and bad debt.  Good debt usually helps to generate more money.  Bad debt usually is developed from poor money management that results from either misuse of income, credit card or loans. Instead of spending money frivolously, it is better to think about ways to make more money.  Many of us like the finer things in life.  However, some cannot financially afford to live a luxury lifestyle.  We often find ourselves over spending and living on our gross versus or net income.  In doing so, we can find ourselves getting into debt.   The best way to reduce debt is to live within your financial means. 

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You can find out how to determine what your financial means is by establishing a budget report.  The budget report should include your monthly net income (take home pay), your total monthly bills amount and the amount you have left over after all of your bills are paid each month.  The amount you have left over is the money that you can either save, invest, or spend frivolously. The latter is what will keep you in a financial bind.  The best way to reduce debt is to stay within your budget.  Evaluate your debt to see which bills you can pay off, make a plan to begin to pay off your debt, start negotiating with credit card and loan companies to see if you can negotiate a reduced settlement amount. 

 

If you are behind in your bills and you need assistance, contact your local CDC office in your community to see if there are grant funds available to assist you or utility programs that could help you with utility expenses.  There are also debt consolidation loan companies and banks that will work with you to pay off your loans and consolidate them into one monthly payment that could be more affordable for you to pay each month.  Just keep in mind that with debt consolidation loans, there could be a higher interest rate, so when paying back the loan in full, you could end up paying more or less depending upon the terms of your loan agreement.  So make sure that you pay attention to the terms and conditions. Also, follow through with reducing your debt. If you have credit card debt, you can try to consolidate your credit cards through a balance transfer to a card with lower fees.  To learn more ways to reduce and pay off your debt, check out this awesome informational video about how to reduce debt:

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Source: Dan Lok YouTube

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By Jason Torrents