Have you looked over your debts lately and decided you really must do something about them? Do they seem to get bigger and bigger each month, and all you manage to pay is the minimum payment and the monthly interest? Does it seem like you will never be able to free yourself from all of these credit card bills and loans?
Well, never fear, there are some strategies you can take to pull yourself out of this situation. Here are some of them:
1. Get prepared. Gather together the latest statements for all of your credit cards and other loans. Bring to the table your budget or a precise list of all your monthly expenses, paper, a pen, and a calculator.
2. Make a chart of all the debts you have, the amount of the principle, the interest rate, the minimum payment, and any other important details.
3. Look over the income and expenses on your budget for each month and find areas where you can cut back to free up some cash to apply to your debt repayment plan.
4. Rank your debts by their interest rate, with the highest interest rate at the top of the list.
Some experts say to start off a debt repayment plan by paying off the debts with the lowest interest first, to get your momentum going quickly. Others suggest that you should tackle the debts with the highest interest rate first because they are costing you the most money. You need to decide which method you prefer and stick to it.
5. Use the extra money you've freed up and start by putting it each month on the first debt on your list. Pay the other debts the same way you paid them before.
6. When all the debts on your list are paid off, start putting the extra money into a savings account. Soon you will have a nice nest egg.
If you don't have a budget, you might want to consider starting one so you know exactly where you stand financially.
For one month, keep track of everything dollar you spend in a notebook. List ALL of your Income, Fixed Expenses, and Variable Expenses. At the end of the month, total up the amounts for the different categories and you will see where your money is going.
This is really the first step to a good money management program and debt repayment plan.
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