If you are living with the burden of significant debt, you understandably may be dreaming about a day when you are finally debt-free. Unfortunately, this day may not come as soon as you would like, and it may not ever come if you do not make a few adjustments to your life and how you manage money. On the other hand, if you approach money management strategically, you could achieve a debt-free status much sooner than you anticipated.

A Strict Budget

A budget is often considered to be the hallmark of financial health. Without a budget, you cannot know how much money you have available for debt reduction, weekend fun with family and friends, savings and more. In addition, a budget is ineffective if it is based on hopes and goals rather than on facts. Therefore, focus on creating a budget that is derived from information pulled from the last few months of bank statements. Once you have this budget completed, look for areas to reduce spending. It may be easier to reduce spending if you save money on fixed expenses. For example, downgrading your cell phone or streaming video plans may result in regular savings.

Financial Discipline

Once you have a detailed, accurate budget, you will need the discipline to live within your means and to avoid overspending in all areas. This can be challenging for some people to do, and you may need to take extra steps to avoid overspending. For example, some people leave their cards at home and only carry a limited amount of cash. Others freeze their credit cards in a block of ice so that they cannot immediately reach for them. You don’t need to do anything drastic or silly, but it’s important to do something that removes the temptation to spend and enforces the rules you have put in place. Find strategies that work well for you.

A Debt Reduction Plan

If you are getting calls from collections services or are having trouble making minimum payments on credit cards and loans, you may need to apply for a debt consolidation loan or take other steps to improve debt management. A consolidation loan with a fixed term is a wonderful idea for many people because the fixed term establishes a firm payoff date. You may also take advantage of credit card transfer offers. Whichever method you use, ensure that you do not make additional purchases with credit cards. These transfer offers usually allow you to pay off debt without accruing interest for a length of time, which means that you pay only for the debt and not for any extra financing charges and fees.

It may not seem like a priority to cut out interest for smaller debts, but it absolutely has a long term impact on your finances. Interest is often forgotten when making long term financial decisions, and is often one of the main reasons that those in debt stay in debt. Extra fees that are added on a monthly basis add up over time and can make it impossible to catch up.

Each person has a unique relationship with their finances and their own challenges. These general tips may be useful to most people, but you may also need to identify your unique challenges and find strategic ways to overcome them.