Some offers on this page are from advertisers who pay us, which may affect which products we write about, but not our recommendations. See our Advertiser Disclosure. Are you motivated to pay off debt, but unsure where to start?
If so, you don't have to figure it out on your own. There are tried-and-true steps anyone can follow to move from wishing their debt would disappear to actually reducing what they owe. If you're ready to get out of debt, here's a step-by-step process you can get started with today to get on the right track.
Before you can make a plan of attack for your debt, you have to get clear about what you're up against. Instead of guessing about the details (and potentially getting things wrong) you'll need to take a look at your financial account statements to get the following information for each debt: Prepayment penalty (if applicable for loans) To be certain you're not missing anything, review your credit reports, too. You can pull your reports from all three credit bureaus for free at AnnualCreditReport.com once a week.
Next, calculate the total amount you owe each month on your debt. To do this, add up the minimum payment amounts due for each account. Note that making the minimum payments on your debts will help you avoid late fees and other penalties, like damage to your credit scores.
So, if your budget is tight, ensure that you pay at least the minimum amount each month. That said, this isn't a good plan for getting out of debt. That's because the interest charges on your debts will cause your balances to keep growing despite the payments you're making.
For example, if you owe $3,000 on a credit card with 21% APR and you make a minimum payment of $55 a month, it will take you almost 15 years to pay off the card — and you'll pay $6,800 in interest charges. To make a significant dent in your debt, you'll need to pay extra toward your balance each month. Which brings us to the next step.
Extract — continue reading at the source.
