Getting out of debt can be summarized into a 3-step process. For this method, I suggest using a spreadsheet program like Microsoft Excel. If you do not know how to use Microsoft Excel that well, you can simply use an old fashioned pen, paper and calculator or an abacus (…just kidding… use a calculator).
List Your Debts
Make a list of all of your debts. List your credit card, car loans, mortgage and any other form of loan which accumulates interest and you are making monthly payments on. You may be surprised to see how much debt you are actually in, especially when it comes to credit cards. It’s amazing to see what a little piece of plastic can do to your life.
Arrange the list in order of highest interest to lowest. So, odds are that your credit card will probably be at the top. List your lender, day debt increases, and the total amount you have to pay (including the interest). Set it up so that you know how much you need to pay off every month to get out of debt. Your goal is to pay more than that!
Pay Off Your High-Interest Credit Cards
Pay your high-interest rate credit cards first. Pay what you can, and it is even better if you pay more than the minimum payment. If you only pay the minimum payment, you are never going to get out of debt. The trick is to always pay MORE than the minimum, because that decreases the amount interest will be accumulated on. These little extra payments will end up saving you THOUSANDS of dollars in debt, because the way that the minimum payment is arranged is that it will take you countless years to pay off your debt if you only pay the minimum payment.
Practice Frugal Living (Be like Scrooge…)
Although Scrooge was an antagonist in a classic Christmas tale, we can learn one thing from Scrooge, how to be rich. Scrooge was a miser, meaning he did not spend any money! So cut off your credit cards, ask your banks to stop sending you credit card offers. Stop impulse spending.
Mon, May 11, 2009
Debt Management, Debt Reduction Advice, Featured, Getting Out of Debts