Did you sit down New Year’s Eve and made a resolution that this is the year that you will finally pay off all that consumer debt you’ve accumulated over the past year? Good for you, it’s one of the best things you can do to create a secure financial future for yourself and your family. Your next step should be to create a plan on exactly how you will pay off this debt and then of course put it into action.
How Much Do You Owe
The first step toward getting out of debt is to face exactly how much you owe. Sit down and list what balance you have on every single credit card and charge account. You may even want to list how much you owe on your car and house as well to get a complete picture of your entire debt. This isn’t easy to do, but facing exactly how deep in the hole you are is an important first step toward getting out of debt.
Don’t Get Deeper Into Debt
Now that you know exactly how much you owe, your next step should be to make sure you don’t go in any deeper. If you can, consolidate your debt into one lower interest account and get rid of as many credit cards as possible. Those that you keep are to be used for two purposes only: Online purchases that you are able to pay off as soon as the statement comes in and absolute financial emergencies. Other than that, don’t even think about charging something else to those cards. If you are tempted by a larger purchase, make yourself sleep on it. You’ll be surprised how many things you don’t really want or need anymore the next morning.
Be Consistent In Paying Off Your Debt
You don’t have to pay a huge amount of money toward getting your debt off each month, but you do need to do it consistently. Here’s a strategy I like to use. Set aside $100 extra each month and start applying it toward paying off your highest interest credit card. You are adding these $100 each month to whatever amount you have been paying each month already. Once this first card is paid off, you take the total amount you paid toward it each month, and add it to whatever you are already paying toward this second card and so forth. Can you see how this will quickly start to snowball? Stick with the strategy and you’ll be debt free within just a few years.
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