You are ready start a program of debt reduction because your debts are way too out of hand. But where do you start debt reduction? It can be overwhelming where to start especially if things are way out of control. But no matter what, you have take steps to realize your goal of debt reduction. Here are a few starting points in your debt reduction journey:

Debt reduction begins with making a budget. A budget involves listing all your income and all your expenses and then using that information to plan how to divide up your income to pay the expenses. It is a very crucial step to debt reduction because it gives you the visual picture of how your money is getting managed. A budget will also reveal wasteful expenses that you can cut out as part of your debt reduction plan.

Analyze expenses in your debt reduction strategy and eliminate those you can. Do you need that monthly cell phone expense or can you do better with pre-paid plan? Do you need all those optional services on your land-line telephone service? Do you even need a land-line telephone service? Some people get by on only a pre-paid cellular phone service plan and save bundles. Debt reduction begins by chipping away at expenses so that you have more income to apply towards the debts.

Prioritize your debts. The road to debt reduction involves taking care of priority debts first. For example, if you are going to lose your home then your mortgage debt should be a priority before your credit cards. In other words, your secured debts should be placed higher in priority than your unsecured debts.

Keep expenses fixed wherever possible. Having fixed expenses easier to handle in debt reduction than variable expenses because they are easier to budget and plan for. Again, the cellular phone plans are the best examples of this. If you get a pre-paid plan then you can budget a fixed amount each month to pay for it. With variable expenses that fluctuate, you never really pin down how to plan for them in a budget.

Make saving an important part of your debt reduction plan. Even though a standard savings account earns very little interest, you still need to save something. Save $20 a week if that’s all you can afford but save something. Don’t set aside so much that you have to immediately pull it back out of savings to pay some bill. Set aside what you can handle. As it builds, you will have the money for unplanned emergencies instead of pulling out a credit card.

Write your creditors. If you are in trouble with the credit card companies then the best you can do is write them a letter and offer a payment amount. You can be almost certain they will reject your debt reduction plan amount but it still shows that you are trying. If a credit card company sues you, the judge will of course want to know if you tried paying or if you just ignored them. Whatever you do, get an agreement in writing with the credit card company as to a payment amount. If the credit card company refuses, just save the letter and show it to the judge. There is no way to predict what will happen in a legal suit but keep in mind that if you cannot pay the debt and you have no assets then you are what is called “judgment proof” for the moment. Don’t panic and keep working on your debt reduction.