If you have debt - whether it's credit card debt, college debt, debt from buying a home or vehicle, you are part of the 80 percent of Americans who owe money. Owing money is an awful feeling, because it feels like whatever you're earning isn't truly yours. When you have a lot of debt, it can seem like affording fun things is impossible - or a hassle.
I'm determined to help you lower your debt, so that we can all afford more things that we enjoy. Here is a plan you can follow, and use to conquer your debt!
1. Face it. 12 percent of college students say they never check account balances because they are afraid of what they will find. To get rid of your debt, you need to face reality, even if you don't like what you see.
2. Write (yes, actually write) a debt-reducation plan. State the goals you want to accomplish, and the steps you need to take to get there. Come up with a timetable to track your progress. Cross off your goals as you achieve them.
3. Pay down your highest interest rate debt first, if you have a good amount of income and financial resources.
4. Use the debt snowball technique, if you are on limited income.
- List all of your debts, smallest balance to largest (do not consider interest rates or terms unless two balances are close to the same amount. If two balances are nearly the same, list the higher interest balance first)
- Pay off the smaller balances first by paying more than the minimum monthly payment.
- Cross out debt as you pay them off.
- As you pay off each debt, take the payment you were making on the paid-off balances and roll it it not the next debt payment on the list. This is the "Snowball" effect.
5. Stop borrowing money! Use your credit cards wisely and don't borrow money unless you absolutely have no other option!