Use These 5 Steps to Reduce Your Debt!

man and woman frowning over bills
  1. Make a list
    1. List your debts with balances, the creditor, interest rates and payments, including debts that are not included on your credit report. List the amount you’ll need to pay monthly to pay off the debt in three years.
  2. Review your terms
    1. Review your credit history and determine if you qualify for better terms (interest rates, 0% balance transfers, etc.). Consider asking for a consolidation loan to pay off any high interest credit cards you may have.
  3. Get your number
    1. You need to understand what your real total amount is to pay off all debts. This is now your goal. Determine the total amount you’ll need to pay monthly to pay off ALL your debt in three years. Write down the result.
  4. Plan and strategize
    1. Determine if you can afford the total monthly payments on the three year plan.
      1. If yes, decide which debt to pay off first. It’s a good idea to pay off the debt with either the highest interest or the lowest balance first.
      2. If no, review your budget for what can be eliminated or decreased. You can also adjust the length of your plan.
    2. Pay as much as possible toward the target debt until your debt is paid off.
  5. Monitor and adjust
    1. Don’t get comfortable. Track your behavior to ensure you are making progress towards your goal. Monitor your credit score and as it increases consider the consolidation loan or balance transfers. Stick to your plan and reward yourself when you hit key objectives.

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