The members of the Money Blog Network (myself included) are writing posts about year-end money moves and I thought that it would be appropriate for me to write a post about a subject near and dear to my own heart - debt reduction.  While preparing to write the post, I was reading through the No Credit Needed archives, and I came across this post from December of 2005.  Here’s an excerpt.

I put another 200 dollars towards debt re-payment.  (I received some cash as a gift Sunday!)

I then grabbed my old checkbook register and looked up that $200 dollar deposit.  The $200 was an unexpected Christmas gift I received from a friend - and I used every dollar of it for debt reduction.

Getting out of debt requires two things - dollar bills and determination. 

Instead of rewarding yourself with a new purse or a new television, determine to direct those dollar bills towards debt reduction.

(If you don’t have a mini-emergency fund, consider using any year-end bonuses or cash gifts to establish said fund.  I suggest a mini-emergency fund of $800 - $2000, depending on the size of your family.  After establishing your mini-emergency fund, begin aggressively reducing debt.)

There are several methods for reducing debt, including:

Make minimum payments on all accounts and aggressively repay the account with the LOWEST BALANCE.

Make minimum payments on all accounts and aggressively repay the account with the HIGHEST INTEREST.

Make minimum payments on all accounts and aggressively repay a group of accounts (all credit cards, all student loans), spreading out extra payments among all accounts in a specific group.

Each method has its pros and cons.  I chose method 1, focusing on the account with the LOWEST BALANCE.

After selecting a debt reduction method, get a jump-start by using any year-end bonuses or cash gifts and begin to attack your debts.

If you receive a cash gift  - Deposit the cash in your checking account and send a check to the next creditor on your debt reduction list.

If you receive a year-end bonus - Deposit the bonus in your checking account and send a check to the next creditor on your debt reduction list.

If you receive a gift that you do not need (or want) - Return the gift for cash or store credit.  If you receive cash, deposit that cash in your checking account and send a check to the next creditor on your debt reduction list.  If you receive store credit, assign that credit to a particular budget category.  (Let’s assume you receive a credit for $50 from Wal-Mart.  Assign the$50 credit to your “grocery” category.  Send a check for $50 (the amount now covered by the store credit) to the next creditor on your debt reduction list.)

If you receive a gift that you cannot return (and do not need or want) - Consider selling the gift.  If you do sell the gift, deposit the proceeds from the sale and send a check to the next creditor on your debt reduction list.

My wife and I spent two years living on a very, very strict budget.  We made the decision that we were going to get out of debt - and we did.  For us, we treated every dollar, every extra, as an opportunity to reduce our debt and reach our goal.

Were there times when we struggled to stay on-plan?  Were there times when we spent more than we had budgeted for?  Were there times when we got frustrated and just blew it?  Yes, yes, and yes.  But, we regathered ourselves and we moved forward.  Why?  We were determined.

Instead of waiting for 2008 to begin your debt reduction go ahead an attack your debts, now!

Visit the Money Blog Network for more year-end money moves.

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I received an interesting email today. “Julie” asks -

Hey, NCN, why did you start blogging about debt reduction in the first place? And, now that you are debt free, do you get tired of writing about debt reduction?

Well, “Julie”, I started No Credit Needed because I was looking for a way to connect with like-minded people. In fact, when I started the blog, I didn’t really know that there were other “personal finance” blogs. I just thought that it would be cool to share my journey with the world - and I hoped that I might be able to find folks who liked to talk about debt reduction. I considered No Credit Needed to be a kind of ‘online journal’ - a place for me to share my thoughts and ideas.

In April, I’ll celebrate my third year of blogging. I must admit, I’m amazed by the number of people who visit my site, leave comments, and share their own stories. I am, quite literally, just a regular dude. I have a great wife, two awesome kids, a job I love, and friends that I enjoy - and yet, every week, thousands of folks stop by to read what I’ve written.

Do I ever get tired of writing about debt reduction? No way! Sure, my goals have expanded beyond debt reduction, but I still enjoy writing about debt reduction and debt repayment.

Now that I’m debt free, my goals have evolved. Personally, I want to learn more and more about personal finance, and I want to provide for my wife, my kids, and our futures. As far as the blogging goes, I hope to continue to connect with my readers, inspire them (a little) and be inspired by them (a lot).

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Isn’t it strange that we have decided that the best way to celebrate the birth of a humble carpenter is to buy expensive gifts, lavishly decorate our homes and max out our credit cards?

Here are a few of my favorite posts from the Money Blog Network -

Please Don’t Use A Loan To Purchase Christmas Gifts - a post by All Financial Matters.

Amazon Price Drop Policy - a post by Blueprint For Financial Prosperity.

Republicans Tax Plans and Democrats Tax Plans - posts by Consumerism Commentary.

Eleven Great Personal Finance Books - a post by Five Cent Nickel.

What You Need To Know About Writing A Will - a post by Free Money Finance.

Tackling Debt Without Using A Home Equity Loan - a post by Get Rich Slowly.

Copper Pennies May Soon Be Scarce - a post by Mighty Bargain Hunter.

Here are a few of my favorite posts from my Blogroll -

Carnival of Personal Finance - a post by Money Smart Life.

Core Asset Allocation Poll - a post by Gen X.

15 Products That Save Money, Time, And Space - a post by Lazy Man.

Appreciating The Value Of A Product - a post by Money, Matter, and More Musings.

Zecco Promotion - a post by The Sun’s Financial Diary.

Learning To Invest - a post by The Digerati Life.

Money Mistakes Credit Cards - a post by My Two Dollars.

2007 and 2008 Goals - a post by Paid Twice.

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2007 has been an amazing year for me, NCN, and my site, No Credit Needed. I thought that it would be fun to take a month-by-month tour through my favorite posts from the last year. If you are a new reader, I hope these posts will give your a sense of who I am, where I’ve come from, and where I’m trying to go. If you are a long-time reader, thank you for your support.

Here are a few of my favorite posts from April of 2007

April 18 - What I Like About Being Debt-Free - When I need a little extra motivation, I reread this post.

April 18 - Can I Use A Debit Card To Rent A Car? - For those of you who don’t use credit cards, this post might come in handy.

April 29 - Credit Card Fees (Further Motivation For Getting Out Of Debt) - I hate paying interest - and I loathe paying fees!

Throughout December, I’ll continue to highlight my favorite posts from 2007.

If you haven’t done so, please consider subscribing to No Credit Needed. (It’s free!)

Click here to subscribe via email.

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2007 has been an amazing year for me, NCN, and my site, No Credit Needed. I thought that it would be fun to take a month-by-month tour through my favorite posts from the last year. If you are a new reader, I hope these posts will give your a sense of who I am, where I’ve come from, and where I’m trying to go. If you are a long-time reader, thank you for your support.

Here are a few of my favorite posts from March of 2007

March 1 - How I Avoid Arguing With My Spouse About Money - Stop arguing and start communicating.

March 4 - My Personal Principles For Prosperity - Here’s how I plan to stay out of debt and build wealth.

March 7 - Welcome Listeners Of The Jean Chatzky Show - I was interviewed by Jean Chatzky for the Oprah Radio Channel on XM Satellite Radio.

March 9 - (Almost) Everything I Know About Debt Reduction - If you are ready to get out of debt, bookmark this post!

March 12 - Things I Actually Did (And Do) To Save Money - 20 Tips for saving money.

March 22 - Financial Inventory Worksheet For My Spouse - What would happen to my family if I were to die or be injured?  The last thing I want my wife to have to worry about is our financial situation.

March 27 - Rebuilding My Grocery Store Price-book - I like to shop for groceries.  Here’s a tool for saving money at the grocery store.

Throughout December, I’ll continue to highlight my favorite posts from 2007.

If you haven’t done so, please consider subscribing to No Credit Needed. (It’s free!)

Click here to subscribe via email.

Click here to subscribe via RSS.

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