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Oct 1, 2007

Saying "No!" To Household Debt

If you treat your home like a well established business, debt relief will follow.

People who successfully manage businesses do everything they can to cut costs and maximize profits. Shouldn't you do the same for your home?

If you are not already, pretend you are a business owner. You have a handful of employees and a good business model, but your margins are thin so you need to closely manage your cash flow. You spend most of your daytime hours figuring out ways to maximize your efficiencies and avoid accumulating debt.

Why? Because the last thing a business wants is to go into the red. The whole point of being in business is to MAKE money, not to owe other people money.

Business owners have to be careful not to get too deeply into debt. They have employees counting on them. They have customers who want fair prices, which the business can't keep offering if the overhead costs continue to rise.

Basically, running a smart business is all about making and saving money.

Yet somehow we tend to make the mistake of running our home finances completely differently. We too eagerly allow ourselves to get into debt. We end up wasting much of our hard earned dollars. We spend way more than we should, for things that we simply cannot afford.

If anything, we must be MORE careful with our personal finances. Our "employees" - aka: our family members - are counting on us to provide them with the safety and security they are entitled to.

If a business goes belly-up, the employees can find other jobs. If your family finances go belly-up, your family structure is at great risk, both financially and emotionally.

So it's time to start running your home finances like you would a well managed business. Debt relief does not come by itself. You have to take control and make smart decisions about your household finances.

Start by keeping a record of all your monthly expenses. Look at the list carefully and determine what can be reduced or eliminated altogether.

Become as ruthless at debt reduction as you can while still being realistic. If you know darned good and well that you're not going to be able to cut out Starbucks entirely, don't put "zero" down for your monthly Starbucks allowance. But do reduce the amount, and stick to it!

Then start attacking your debt the way you would attack business debt. Relief from these obligations will come as you systematically payoff your creditors one by one, starting with the smallest balance and working your way up.

Track your progress regularly. Have "board meetings" with the family members once a month to talk about how you're doing, and to make sure everyone is onboard with the new mission statement.

By all means, give your "employees" a bonus now and then - maybe a nice but inexpensive trip out for some dessert, or take a weekend vacation "camping" - just to let everyone know the boss still cares, and that you're doing it all for them.


About the Author: These debt reduction tips, and many others, can be found at Debt-to-Income.com, which is a new website that was created by money savings expert, Richard Gorham. Gorham is also the founder and President of Leadership-Tools.com and www.LeadershipAudio.com His websites are devoted to providing free and low-cost quality tools and resources for successful living.