Budget Your Money
It may not be at the top of your list of priorities but making a monthly budget is the most basic step to getting out of debt. Create a list of all of your monthly expenses and how much money goes where. You are essentially telling your money where to go in any given month.
Change Your Spending Habits
This goes hand in hand with sitting down and budgeting your money. When you budget you are forced to look at your spending habits. Are you spending $5.00 on that daily mocha when you can drink coffee at home? Do you find yourself going to dinner and drinks with friends a couple of times a week? All of these little extras can add up so in order to reduce debt you have to look at what you spend your money on and change those habits if you can not afford them.
Repair Your Credit Score
Unfortunately, a higher credit score dictates the interest rate you can receive on loans. The higher interest on your loans the harder it is to pay down the principal. It is important to find out what your credit score is and find out how to repair it to start putting a dent in your debt.
List Out Your Debt And Start A Plan
It is important to know what you owe on each loan. List out each monthly payment and how much your total loan is and the interest rate. Some financial experts state to pay off the loans with the highest interest rate first, others say to pay off the smallest loan so you can pay that off quickly then attack the next loan. Whatever you decide, just make a list of your loans and start paying off any extra money from your budget toward the loan you choose to pay off first.
Pay More Than The Minimum
Start paying more than the minimum required one loan at a time. Instead of an $80.00 minimum payment try paying any extra $50.00 or even $100.00 on it. That way you can pay more on the principal balance instead of covering just the interest rate.
Stop Paying With Plastic
Take all of your credit cards out of your wallet and remove the temptation from your life. Chances are that credit cards are the reason you are in debt in the first place. Geoff Williams, contributor for usnews.com, states that credit card debt that you carry from month to month is a money killer thanks to interest that just grows. So grab your nearest pair of scissors and start cutting away.
Use Bonus Money To Pay Off Debt
If you receive any sort of profit share checks or bonuses from work, put that money toward your debt. It may be tempting to use this money to go on a vacation or shopping trip but paying off debt will be just as rewarding in the long run.
Knowledge is power when it comes to reducing your debt. By using a few of these simple tools you can start chipping away at your debt one dollar at a time.