It’s one thing to think conceptually about debt, but here are some tips to help when you’re ready to take action and really tackle your debt.
Know your number.
Before you can reduce your debt, you need to know how much you have. Create a list of all of your debt so you can track each and every one. Consider posting that list in a prominent place where you’ll see it often (like your refrigerator door). The idea is to own up to what you owe.
Create your plan of attack.
Start by figuring out your budget. This means being brutally honest with expenses that you need (like housing and food) vs. things you really want (like cable or going out). Once you have your expenses prioritized, you can then decide how to tackle your debt. One idea is to start with paying down debt with the highest interest rate first; then work your way down to the debt with the next highest interest rate, and so forth. While you do this, remember to continue paying the minimum on all your debt.
Use cash instead of credit.
For example, if you have a budget of $50 for lunch during your work week, place $50 worth of cash in an envelope. Once you use it up, you’re done. You’ll be amazed at how hard it is to spend only what’s in that envelope, but you’ll know 100% that you’re sticking to your budget.
Eliminating your debt won’t be fast or easy, but if you track your results, you’ll find that slowly chipping away at every little bit counts. And over time, that’s how you make real progress.
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