Put Your Plan Into Action
After assessing how much money you owe, you may learn that you're carrying too much consumer debt. Don't let this realization overwhelm and paralyze you. By combining financial planning with debt management techniques you can reduce your debt with the following tactics:
- Create a get-out-of-debt plan. Use the Debt Recovery Worksheet to help you organize your plan. Although every creditor must receive a payment each month, put any extra cash toward the debt with the highest interest rate.
- Cut expenses. Try to identify a few things you could stop buying or buy less often. For ideas, review Know Where Your Money Goes and Shop Smarter.
- Assess your ability to pay bills as you develop your get-out-of-debt plan and then take the appropriate action. For example, if you bought a car and are having trouble making the payments, it may be better to sell the car and pay off the loan rather than let the creditor repossess the car. Repossession will hurt your credit record.
- Try to increase income. Is it possible to get a second job or get paid overtime and use the money to reduce debt? If you have family responsibilities, first consider what effect your absence could have on the well-being of your family. It's important to balance your get-out-of-debt plan with the need to spend time with your family.
- When one debt is paid off, keep paying the same amount – just put it toward another remaining debt.
- Consolidate loans to make your financial planning with debt management solutions reachable. Shift higher-interest loans to a single lower-rate loan and stop running up new charges. If you choose to use a credit consolidation service, make sure the company is reputable. Check to see how they are rated with the Better Business Bureau (www.bbb.org)
- Keep only one or two major credit cards. Cut up the other cards and call the credit card companies to cancel the accounts. Keep the remaining one or two credit cards at home (as long as they won't be used by anyone else). Consider having the credit limits lowered.
- Make your get-out-of-debt plan more effective by stopping most credit card offers from arriving in your mail: Call 1-888-5OPT-OUT (1-888-567-8688, www.optoutprescreen.com).
Put Your Plan Into Action
After assessing how much money you owe, you may learn that you're carrying too much consumer debt. Don't let this realization overwhelm and paralyze you. By combining financial planning with debt management techniques you can reduce your debt with the following tactics:
- Create a get-out-of-debt plan. Use the Debt Recovery Worksheet to help you organize your plan. Although every creditor must receive a payment each month, put any extra cash toward the debt with the highest interest rate.
- Cut expenses. Try to identify a few things you could stop buying or buy less often. For ideas, review Know Where Your Money Goes and Shop Smarter.
- Assess your ability to pay bills as you develop your get-out-of-debt plan and then take the appropriate action. For example, if you bought a car and are having trouble making the payments, it may be better to sell the car and pay off the loan rather than let the creditor repossess the car. Repossession will hurt your credit record.
- Try to increase income. Is it possible to get a second job or get paid overtime and use the money to reduce debt? If you have family responsibilities, first consider what effect your absence could have on the well-being of your family. It's important to balance your get-out-of-debt plan with the need to spend time with your family.
- When one debt is paid off, keep paying the same amount – just put it toward another remaining debt.
- Consolidate loans to make your financial planning with debt management solutions reachable. Shift higher-interest loans to a single lower-rate loan and stop running up new charges. If you choose to use a credit consolidation service, make sure the company is reputable. Check to see how they are rated with the Better Business Bureau (www.bbb.org)
- Keep only one or two major credit cards. Cut up the other cards and call the credit card companies to cancel the accounts. Keep the remaining one or two credit cards at home (as long as they won't be used by anyone else). Consider having the credit limits lowered.
- Make your get-out-of-debt plan more effective by stopping most credit card offers from arriving in your mail: Call 1-888-5OPT-OUT (1-888-567-8688, www.optoutprescreen.com).