Many people are looking for effective and efficient ways how to eliminate debt from tightening their belts to consulting with debt elimination advisors. The latest of these methods is the use of budgeting applications, which can be accessed via the Internet either for free or for a fee.
Remember These Are Tools Only
Keep in mind that budgeting applications are not designed to be the be-all and end-all of getting out of debt, whether it is a credit card debt, a mortgage, a personal loan, or a combination of all three types. These are instead designed as simple yet effective tools used for the following purposes:
- Identifying and classifying the debts based on categories like amount, due date, and effective interest rate
- Determining the best strategy for paying the debts based on the most effective and efficient route (i.e., the order of payment, the amount for payment each period, and the methods for decreasing overall cost)
- Evaluating the efficacy of the strategy and monitoring the progress of the debt elimination process
All of these budgeting applications use spreadsheet technology to identify, evaluate and monitor the debt elimination strategy. As such, you must still provide the manual inputs into the system for it to work as well as expected.
The bottom line: The best way how to eliminate debt is to make a firm commitment to the process and then use the available tools, such as an appropriate budgeting application, to achieve your goal. You will have a tool in formulating a manageable, realizable, and intelligent debt reduction plan.
Choose the Right Budgeting App
Like all computer applications, budget apps are usually designed for specific purposes, even specific cohorts. As such, you may find the Debt Analyzer as a better fit for your needs and wants in debt elimination than, say, the Debt Planner Pro.
Choosing the right budgeting software is then an important aspect of using the application to your benefit. Start by doing your research on the features and functions of the budgeting application, comparing these aspects, and then making your choice best on the app that best suits your needs and wants in it.
The popular budgeting applications in the market today include:
- Zilch Standard (Windows)
- Debt Analyzer (Windows)
- Debt Quencher (Mac)
- Squawkfox Debt Reduction Spreadsheet
- Ready for Zero
- Debt Coach
- Debt Payoff Planner
- iQuick Debt Payoff
One of these budgeting apps should be sufficient for the purpose. Keep in mind that you will require just one app but you must adopt several other debt reduction measures, as discussed below.
Adopt Smart Financial Habits
Your personal commitment and stick-to-it attitude can mean the difference between getting out of debt and staying mired in it. You must then adopt these smart financial habits along with your adoption of one of the budgeting apps.
- Set a budget for payments of your debt and stick to it. Make small sacrifices that will eventually become large sums of money (e.g., foregoing on the designer coffee runs).
- Pay more than the minimum amount required on the bill, which is true for credit cards. Otherwise, not only are you prolonging the agony but you will also be paying for higher interest rates, among other charges.
- Consider the snowball strategy when paying off your debts, especially when it is recommended by your chosen budgeting app. Basically, you will pay the minimum amounts due on all of your debts except on one debt, which you will pay the balance on as high as possible. Your goal is to pay it off as quickly as possible and then focus your aggressive repayment plan on the next debt.
- Find ways to cut costs and earn extra income. You will find that paying off your debts will mean getting more money in and ceasing on your shopping sprees.
Of course, you can always renegotiate the terms of your debts with your creditors truly, a good way how to eliminate debt at lesser overall costs.