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5 top tips for creating a debt reduction plan

Once you decide that it’s time to get out of debt, you need a plan. A debt reduction plan can help you organize your efforts so that they are more effective over time. Plus, the right debt reduction plan can help you stay on track, and monitor your progress.

You need to start creating a debt reduction plan that you will be able to stick to, as well as one that will result in freedom from debt. Here are some of the best strategies for creating a good debt reduction plan:

1. Be realistic

At first, it’s tempting to set a lofty goal of being debt-free in six months or 12 months. This isn’t a bad desire. However, you also need to be realistic. Grand attempts to pay $2,000 a month toward your debt, when you’re struggling as it is, just doesn’t make sense.

Approach your debt management realistically. Consider your income and your necessary expenses. Look for the unnecessary expenses that you can cut back on. Then, create a debt reduction plan that is realistic. You have to be able to keep making payments regularly for a debt plan to work. If you aren’t realistic, it’s easy to get burned out on your plan and start to give up. Getting help from a company like Consolidated Credit can help you create a realistic plan.

2. Create achievable milestones

Identify achievable milestones that can provide you with a sense of accomplishment as you move forward. At the beginning, you can set milestones that are closer together, and slowly move them apart as your efforts pick up steam.

Milestones help you see progress as you reduce your debt. If you set a milestone at $500 debt paid off, and another at $1,200, and another at $2,500, and so on, you can celebrate (frugally, of course) your progress. A visible reminder, such as a chart, can help you stay motivated.

3. Look for ways to boost your debt payments

Don’t forget to look for ways to boost your debt payments. While you want to keep the same base debt payment throughout your plan, you can also make a game of adding a little extra to the payment on a regular basis.

You can do this by cutting something from your budget one money, and then applying it as an extra payment toward your debt. Another option is to look for creative ways to earn more money that can be used to supercharge your debt repayment. Make a game of it, and find ways to boost your debt payments and get out of debt that much sooner.

4. Do what works for you

There is a debate about whether you should start with the smaller balance first, or start with the highest interest rate. While starting with the highest interest can help you reduce the overall cost of your debt, some people find that method psychologically difficult to keep up with.

Instead, look for a method that works for your situation, and that you are likely to stick with. The important thing is to make progress and pay down your debt. Your debt reduction plan should work for you.

5. Don’t give up

Even if you have to tweak your plan a little bit, or if you mess up one month, don’t get discouraged and give up. Remember that each day is a new day; you can get back on track. If you miss your target on a debt payment, don’t stress yourself trying to “make it up.” Just make sure that you pay the full debt payment the next month.

You can also get help if you need to. If you feel overwhelmed, consider seeing someone qualified to help you create a plan, and help you stick with it.


  1. Howard

    Debt can be used as a means of forced saving and all our major corporations and Governments would not exist without Debt.
    There is nothing wrong with manageable debt, especially if the cost of owning the debt is less than the returns from the debt acquired asset.
    Reckless spending and resultant debt is a psychological problem.
    I have never been to a Starbucks and may go to Tims once a year,my Father always taught us when you spend a $1 you had to earn $1.25, so really you are spending a $1.25.

  2. Andy

    I found a Toyota Tundra truck on Auto Trader Web site. I emailed the guy about it and he sent me this email in return.

    Hi Andy,
    My wife and I are happy to have found a buyer for our vehicle so soon. If you are not able to travel to Terrace, BC in the next 3 or 4 days to test and inspect the vehicle, since I can only hold the vehicle for you that long. I prefer to use a third party company like Amazon Payments that will hold the funds in their trust account until you receive and inspect the vehicle. The shipping will be handled by my and will be started in 24 hours after your payment is confirmed.

    The shipping will take from 3 to 5 days to arrive at your door depending on your location and from the moment it arrives you will have 5 days to test drive and inspect the vehicle. If it doesn’t match my description or if you find anything wrong with it (but it won’t be the case since is in flawless condition), Amazon Payment will refund your payment and I will be in charge of the returning fee. Once you have the vehicle inspected you need to contact Amazon to redirect the payment to me. Using Amazon we are both protected, you will have the payment secured by them.
    Giving the nature of this transaction please note that my sale terms are final and nonnegotiable. If you are ready to purchase the vehicle please forward me your phone number so we can discuss final details.

    Dr Edward Graham
    I phoned Amazon and they said they DON’T offer that kind of service at all. THIS IS A SCAM….. I almost lost $16,000.00

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