Who doesn’t want to live a debt-free life?
Shelling out hundreds of dollars in interest each year on car loans, credit cards and mortgages is not exactly the financial situation most of us strive to be in. Paying down debt is an arduous process, but it can be made tolerable if you follow a few simple steps:
Step #1: Carefully examine the details of your debt. Look at your balances and APRs affiliated with credit cards. In addition, review mortgages or other loans to fully understand the financial parameters you are working with.
Step #2: Make a list. Write down all of your sources of debt. For example, if you have multiple credit cards, jot down the amount you owe, note the APR for the current balance, the APR for new purchases and the amount of available credit you have for each card.
Step #3: Review your budget and determine how much you can spend each month paying down your debt. The more you can afford to pay each month, the faster you will pay off your outstanding debt. If you have the means, money experts suggest increasing the amount you are currently paying on a loan or credit card by 50 percent.
Step #4: In order to increase the amount of money you are paying to erase your debt, you will likely have to reduce your spending in other areas. For example, you might consider eating at home on the weekends rather than splurging at restaurants. Also, eliminate temptations to spend money by avoiding malls and movie theaters.
Step #5: Finally, once you map out a way to pay down your debt, concentrate on formulating a plan to stay debt-free. Monitor your cash flow and expenses, and resist the urge to use a credit card for purchases you can’t afford.