Tips for Getting a Handle on Your Debts
If you feel trapped by your debts and unsure of where to turn, you are not alone. Many of us feel overwhelmed by debt, and it does not take a totally out of control situation to be overwhelming. Even if you are still able to pay our current expenses and avoiding sinking further into debt, you may still feel dragged down by the weight of all those old debts that have accumulated over the years.
Fortunately, there is a simple and straightforward process that can help you get out of debt and remain debt free for the long run. It takes some dedication and some perseverance, but it does work.
Step 1 – List what you owe
The first step is simply to list all of your debts, beginning with the smallest, followed by the larger and larger debts. When making your list, write down your largest high interest debts before your largest low interest debts.
Step 2 – Keep paying the minimums on all your debts
At the same time, put any extra money toward the smallest unpaid balances. As you begin to eliminate some of your debts, you will feel empowered, and motivated to eliminate the remainder of your debt. Cross each debt off your list as you pay it, and this will give you a real feeling of accomplishment.
Step 3 – Roll those payments forward
After you have paid one debt off completely, add the money you were paying each month to service that debt on to the next debt on your list. For instance, if you were paying $100 a month on your smallest debt, you would add that extra $100 a month toward the next debt on the list. When that debt is paid off, roll the payments forward to the next debt, and so on.
Step 4- Continue using this strategy until all debts have been paid
After all the debts on your list have been paid, take the money you had been using to pay those debts and put it into a savings plan. This will help keep you from accumulating new debt while at the same time providing you with a real financial cushion.