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Erase Debt from Your Life in the New Year

Debt is a common problem in America. Every middleclass family has one form of debt or another and a significant part of their monthly income goes into repayment. Having debt may be inevitable, maybe even beneficial at times. However, there are cases when debt becomes unmanageable. If you are knee-deep in debt, it’s time to take action.

Every little bit goes a long way. Take note that every penny you save is a penny that will help you get out of the debt trap. Below are some tips that will point you to the right direction:

Keep Track of Your Spending – this is a very sensible thing to do. But it is sometimes still amazing how many people fail in this task. Money can be gone so easily that you won’t even notice it unless you keep track on what goes out. Try to keep a cash notebook or use an online application tool like Mint.com to be aware of your spending pattern.

Make a Budget – every self-respecting financial expert will tell you to develop a budget to have any hope of controlling spending. After observing your pattern for several weeks, it is possible to develop a realistic and effective budget. Go for the balanced money formula which states that you keep 50 percent for your needs, 20 percent to saving, and the rest to lifestyle spending.

Earn Money from Your Money – if you have some leftover money from the bank, it is a good idea to invest it in high-yielding financial mediums. It enables you to create money from your savings. Some popular options today include rewards checking account, online savings account, and certain types of special deposit account.

Look for Possible Discounts – people have a tendency to keep paying what is charged to them. This is not always recommended. It is actually possible to ask for discounts, reduced rates, or freebies from the companies you deal with. For example, some banks are amiable to giving you a lower fee provided that you can give a good reason (other bank offers). Meanwhile, look at your insurance options as well. There is a lot of savings that can be derived from that.

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