Financial Directory

Getting Out Of Debt

Monetary debt is one of the leading causes of emotional and psychological stress in our lives.  Here are steps to help you dig yourself out of the hole.

• Know Your Money Situation:  Pull out all your bills and write a list to determine how much debt you really have and at what interest rates.

• Track Your Expenses:  You need to find out where your money is going in order to find extra money to pay down your debts.

• Create a Monthly Spending Plan:  Live within your means.  Everyday spending decisions can have strong impact on your financial planning, especially if you make credit-based ones.  You have a choice in how you spend your money.

• Prioritize Your Debt Payments:  List all your debts except the mortgage in order of the smallest pay off balance to the largest.  Pay the minimum and on time payments to stay current on all the debts except the smallest.  Use every dollar you can find from your budget to pay toward the smallest debt until it is paid.  Start to pay toward the next smallest debt until all is paid off.

• Pay down Your Credit Cards:  The key to getting out from credit card debt is to pay more than your minimum payment.  By making only the minimum payment each month, you significantly prolong and increase your debt by allowing more interest to accrue.  The fastest you pay off your credit card debt, the less you pay in interest.

• Prioritize Your Credit Card Payments:  List all your credit card debts in order of their interest rates from the highest to the lowest.  Each month, pay only the minimum payment for each card except the highest interest rate.  Put all of the money you can afford toward paying off that credit card.  Once you pay off that card, do the same for the card with the next highest interest rate.

• Stop Spending:  The quickest way for you to get back on sound financial path is to stop spending.

• Find More Money:  Downsizing to a smaller home.  Get rid of extra vehicles.  Take on a second job to meet household expenses or to pay off debt.