Establish a Personal Debt Relief Plan with Debt Freedom Tips

Debt Freedom Plan #2 - Your debt is slowly building up, in particular your unsecured debts such as credit cards or a home equity line of credit. Debt balances are increasing from month to month and cash flow is becoming a problem.

For this debt scenario you are slowly falling behind with debt, but your financial situation is not yet dire. However, it is only a matter of time before you start missing debt payments and your credit score takes a hit. Debt relief planning is a necessity. If you cannot stick to an aggressive personal debt relief plan, they you will need professional debt relief assistance before too long. Your primary goal is first to hit a break-even cash-flow from month to month. Then you can move toward chipping away at debt and improving your situation.

• Way of Life - Get organized, study your expenses, create a budget, track the progress of your debt relief plan every month.
• Way of Life - Cut the frill like buying coffee on the way to work, pack your own lunch and stop eating out in general.
• Way of Life - Cancel magazine subscriptions, memberships and other costs that you can live without.
• Way of Life - Reduce cell phone luxuries or limit them to need-only - separate the "want" from the "need". Stick with a basic phone plan that you and your family can live with.
• Way of Life - Don't cut out TV unless you must, but minimize the service plan if possible, and similar for your internet connection.
• Way of Life - Rent movies or go to the dollar-theater, and skip the popcorn.
• Way of Life - Get the whole family on board. Conserver energy, water, gas, mow your own lawn, cancel maid services, pet grooming, tanning beds, manicures, hair salons, chiropractors, etc. If you can't give many of these luxuries up, then your situation will not improve.
• Way of Life - Stop shopping except for food and the bare essentials!
• Way of Life - Look at 2 months of bank statements to find ideas where you can find debt relief. Some of these changes will hopefully be permanent, but most importantly a debt relief plan will buy you the time you need to get back on top of your debt.
• Lowering Expenses - Check your credit score, and actively begin a credit repair process to remove inaccuracies. Better credit means better interest rates, which will help out with the suggestions described below.
• Lowering Expenses - Consider refinancing your home, but make absolute sure that it will help your bottom line.
• Lowering Expenses - Consolidate debt through a home equity loan or credit card balance transfers.
• Lowering Expenses - Consider refinancing your auto loans, or "trade-down".
• Lowering Expenses - If you have tax debt, contact the IRS or State, and work out a debt relief payment plan.
• Lowering Expenses - Take a close look at your phone bills. If you have a FAST broadband internet service, consider replacing your traditional phone service with a service from Vonage or Magic Jack or equivalent.
• Lowering Expenses - Try living only on cash, a debit card or a pre-paid credit card. Stop using traditional credit card unless it means no food on the table. Unless it is an emergency, if you can't afford to buy it in cash, then don't buy it.
• Lowering Expenses - Temporarily reduce 401k payments or other investments in order to pay off debt. If your investment returns less than the interest rate on your credit cards, then paying your credit cards off is the better "investment." Just be sure that every dollar taken away from your 401k goes directly towards repaying debt.

Be creative but most importantly be proactive and stick to your personal debt relief plan. You have an opportunity here to free up hundreds of dollars per month and regaining a positive cash flow. As unpleasant as enforcing a personal debt relief plan can be, it can get so much worse if you do not take action soon. Take charge of your household, including your children, and get the job done. This is a time for tough love.