Get You Finances In Order
I want to reduce my debt – where do I begin?
If you have decided it’s time to reduce your debt, congratulations! Now it’s time to make a plan. Everybody wants to eliminate their debt, and often people are fighting to get out of credit card debt. Here’s how to get started.
First, you need to have a true picture of your finances. If you haven’t already, make a list of all of the debt you have outstanding. Include in this list mortgage loans, vehicle loans, loans from friends or family, taxes you owe and credit card debt outstanding. List the company or person who gave you the loan, the total amount you still owe and the interest rate on the loan.
Once you have finished your list, figure out which of the loans has the highest interest rate. This is the where you want to begin! If you are paying the minimum payments on each of your loans, begin to put as much extra money as you can on the loan with the highest interest rate. For example, if your minimum monthly payment on your highest interest rate loan is $200, then begin paying $300 each time. If that’s too much, determine what you can pay and begin doing it.
When you get the highest interest rate loan completely paid off, pat yourself on the back! Then take a look at the loans left on your list. Pick the loan with the next highest rate and follow the same process. Pay as much extra as you can each month. Follow this process until you have reduced your debt to an acceptable level. Then you can say, “I know how to reduce my debt.”
A final thing to consider as you go through this process is changing your spending habits. If you have an excessive amount of debt, by choosing to lower your standard of living, you will be able to pay off your debt even more quickly.
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