Times are tough all across America. If you are having trouble paying the bills each month, you may be relying heavily on credit cards. But as you watch the balances rise, and the interest fees accumulate, you’ll quickly realize credit cards aren’t the way to go. So how do you get out of debt? Use these 5 steps to help you reduce the amount you owe.
Make A List
The hardest thing to do is to recognize how much you owe. If you get the bills and set them aside, it may not seem like a lot of money. Instead of setting things aside, get out a notebook, find your statements, and make a list of everything you owe. List out how much you owe, interest rates, and minimum payments. Then choose the smallest balances with the highest interest rates, and make it a priority to pay them off quickly.
Set a Budget
Now list out how much money is coming in. This may be the hardest part, but it’s important to make sure you decrease your monthly expenses instead of increasing them. Put your payments at the top of the list to be paid. Cancel the things that are unnecessary and can save you money, such as cable and dinners out. Work to stay on budget, and slowly grow the money you can use for paying off debt.
Get a Copy of your Credit Report
All credit report companies offer a free report once per year. Check out where you stand, and make sure you agree with everything reported. Correct erroneous items.
Don’t Look Towards The Obvious
Don’t automatically look towards your home equity to help you. Property values may be lower than in the past few years, and equity lines of credit are harder to come by. Tapping out the one investment you have now may hurt you down the road.
Make a Change
Instead of doing what you’ve done in the past, look to create a brighter future. How can you learn more about financing or credit, and use it to your advantage? Study from others that have moved away from high credit card payments. And consider moving towards real estate to help you make money instead of spending it. A great real estate agent can share with you many secrets about how to succeed, even in our current economic times.
