-
Step 1
List your debts in order of smallest to largest, unless one has an interest rate that is much higher than the others, in which case, list it first. This is the order in which you will work to kill your debts, paying only minimums on the others while you put any extra money toward the first debt on your list. Take stock of all that you owe so you have a clear picture of what needs to be done to be debt free.
-
Step 2
Make a budget to live on while you work to become debt free. Begin with your mortgage, food, energy bills and transportation. Add in your debts and a small amount of extras, such as spending money and household needs.
-
Step 3
Determine how much extra money you can put to the debts above the minimum payments. After completing your budget, you should know how much money can go toward your debt free plan each month. Use a debt calculator online to see how long it will take to pay off all debts.
-
Step 4
Trim the budget in order to add money to your debt free plan each month. Stop eating out, drive less, and shop the grocery sales to make the most of your budget.
-
Step 5
Consider additional sources of income to pay down the debt--you'll be shouting "I'm debt free!" much sooner if you can add extra to your debt payments each month.
-
Step 6
Write down your target debt free date and your plan of attack. Include your extra income goals and the current amount of your debt. Keep it as a motivating record as you become debt free.
Comments
Fruitfulness said
on 11/24/2008 I am a newcomer. I found your article very informative and helpful. Thank you so much.