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debt reductionMany Americans dream of the day they will be debt free. They dream of the time when they will owe zero balances on all of their credit cards, have their mortgage paid off in full, and own the pink slip to the car they've been paying off for years.

For some individuals, the dream of being debt free may still be a ways off, but the opportunity to drastically reduce their level of debt is within reach. There are many strategies and many options available to enable individuals to begin to reduce their debt.

Debt reduction takes patience. Just like being completely free from debt, debt reduction also requires time and effort. Follow the rules outlined below and you will begin to see the light at the end of the tunnel.

Rule #1 - No new debt

There are a few basic rules in order to see progress when pursuing debt reduction. The first rule is that the debtor must make a commitment not to take on any new debt. There is no point in actively, aggressively pursuing debt reduction if you are just going to add more debt and be right back to where you started. You must make a commitment not to add new debt to the stack of debt that you are attempting to tackle.

Rule #2 - Create a budget

The second rule is that you must have a budget. You need to know how much you earn, and how much you are currently spending. You must be willing to put yourself on a budget and limit certain spending habits in order for you to make progress along the path of debt reduction. You may need to skip that latte, or forgo going out to dinner so often. You must find places to cut corners, so that you have the ability to use those funds towards debt reduction.

Rule #3 - Have a repayment plan

You must have a debt reduction plan. You will never see results if you just continue to pay minimum payments on all of your debts. You need to have a definite repayment plan. Some people like to pay off the largest balanced debt first. Others like to pay off the debts with the highest interest rates first. Whichever strategy you prefer, you need to have a plan to follow so that you can stay on track and keep the debt reduction process rolling along.

Rule #4 - Set goals

You must set goals for yourself. If you try to accomplish debt reduction without setting measurable goals, you are setting yourself up for failure. If you set goals as sign posts of progress, you will begin to see your debt reducing and you will become encouraged. You may even become excited about your progress and enjoy the learning process that comes along with the hard work of debt reduction. Without goals, you are more likely to feel like you are making a lot of effort with little pay off. That attitude alone will set the tone for failure and falling back into old spending habits.

With these rules, you will be well on your way to the path of debt reduction. Whether you use a financial agency or credit counselor to help you, or you choose to travel the path of debt reduction on your own, you will find that the work to achieve debt reduction will be worth it in the end.

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