Reduce Your Debt Now

All of us strive for financial freedom. I know new clothes, a fast car and luxurious vacations make us all feel good (albeit temporarily), but you know what feels even better? Not having to worry about living paycheck to paycheck and owing other people money. If you are carrying debt other than your mortgage or low interest student loans, please read below and act immediately.

• Get organized. Get out a sheet of paper right now. Write down all of your credit cards, gas cards, department store charge cards, auto loans and any other debt you pay on a monthly basis. Record the interest rate for each one, the total amount owed and your monthly payment.
• Pay off your highest interest rate debt first, even if this means paying the minimum amount on your other cards. You may even consider consolidating all of your credit card debt onto one low interest card. Check out creditcards.com. This is an awesome website that allows you to compare various offerings no matter what your credit situation is. By having all of your debt on one or two cards, you can better manage your debt (and your progress).
• Freeze your spending, literally. If you have credit card debt, stop charging. The easiest way to do this is to grab a tupperware, place your credit cards in it, fill the tupperware with water and stick it in the freezer. If an emergency arises, you can always defrost it. If you think not using your credit card is impractical, think about impractical it is to keep racking up debt and getting further and further from your financial goals. Instead of credit card, use cash or your debit card and make sure to keep a spending journal. This entails writing down EVERYTHING you spend money on.
• If your debt is really out of control, you may want to consider refinancing your home. I do not recommend taking on a second mortgage, but you may want to use existing equity in your home to pay off the higher interest rates you find on most credit cards. Plus, the interest on your mortgage may be tax deductible (consult your accountant).

Finally, the easiest way to get out of debt is to stop spending money. Forget about new clothes, vacations, expensive gifts, dining at restaurants, bar hopping and everything else. Instead, use the money you would've spend to reduce your debt. I guarantee you will feel much better about living debt free than any material possession.