Once you've decided that you want to get
out of debt you need to set up a debt repayment
plan. It is important
to realize that by applying your extra money to one debt at time,
you will significantly speed up the debt
repayment process. If
you work hard you will be astonished at how quickly you can pay
off your debt.
- Make a list of all the debt that you
have. Your list should include the minimum payment amount,
the interest rate and how much you owe.
- Rank your debts in the order that
you want to pay them off. Some experts recommend going from
smallest to largest, since this helps to get the momentum going.
Others recommend listing the debts from the highest to the
lowest interest rate, since this will save you the most money.
- Decide how much extra money you
have a month to pay towards your debt. You may need to cut
back spending in other areas so that you have the money to
put towards your debt repayment plan. You may also decide to
take on a part-time job or to pick up overtime hours. Additionally
you may want to apply all the money you receive from gifts,
bonuses or tax returns to your debt.
- Pay all the extra money on the first debt on your
list, while paying the minimum on all other payments. Once
you have paid it off move to next debt on your list, paying
the extra plus the current minimum payment. Continue to do
this until you have crossed all the items off of your list.
- Put most of the extra money you now have into savings.
Soon your money will begin to work for you. Make sure that
you cut up and cancel your credit cards as you finish. That
way you will never need to do this again.
What You Need:
- The most recent statements of your credit cards and other
loans.
- A calculator.
- Your budget.
- Paper and a Pencil.
RESOURCES: Debt Repayment Plan
FTC Bureau
of Consumer Protection - Consumer Information: Credit & Loans
Credit Report
and Score Information from Experian.com
TransUnion
- Check Your Credit Report and Credit Score Online, Instantly
and Securely
Equifax
Products: Credit Reports, Credit Scores & Identity Theft
Protection
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Personal Finance
Money Tip: Track your money. Know how much you have and how much income you can reasonably expect in the near future. Know what your monthly expenses are and what you have left to pay creditors. |
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