Getting out of debt is no easy task. Even if you can do it quickly, as you can with a bankruptcy or a debt settlement, it leaves a mark on your credit and can cause problems in the future. And if you work hard to make those payments and pay down your balances, it can take a long time and a lot of sacrifice. But with a solid debt elimination plan you can get started today in paying down your debt and pay off those bills faster than you probably thought possible.
First, you must take a hard look at your financial health. This includes:
• All income
• All monthly, quarterly, semi-annual and annual expenses like utilities and insurance premiums
• All debt like loans, credit cards, medical bills and mortgages
• How you spend the money that’s left-how much on groceries, renting movies, clothes, etc.
If you don’t have any money left when you figure up what you need every month, then you need a serious budget overhaul. Some type of debt or credit counselor can help you work out a livable budget while still paying down your debt as quickly as possible.
After you have all the vital numbers in front of you, you might find that you don’t have very much money left at the end of the month. You have paid all the bills, bought all the food and spent a little on entertainment and miscellaneous items. But even if you’ve got $5 that doesn’t need to go into savings or for any other expense, you can start a debt elimination plan.
Find your credit card with the biggest balance and interest rate. Pay the minimum plus that extra $5 or whatever you have to spend each month, while paying only the minimum on the other cards. You might not feel like you are getting anywhere for a while, but as that balance starts to drop a little faster, momentum will build. Once that card is paid off, take everything you’ve been paying on it and add it to the minimum payment of the next largest card while continuing to pay only the minimum on the rest.
When that card is paid off, take that amount and apply it to the next biggest card. This method words because as you pay a card off, you will feel a sense of satisfaction that you’re really making a dent in your debt and that means you’re more likely to stick with the plan.
The more you pay, the faster you’ll get out of debt. So how fast you eliminate credit card debt depends on how much more you are willing to earn and how much you are willing to sacrifice to pay down those balances.