Paying Off Your Debt

80% of Americans are in debt, and the average person has 3.5 credit cards.  With debt in multiple places, it can be discouraging to begin paying everything off.

If you have multiple debts, start by listing each credit card account that you have.  Next to each account, write its interest rate, outstanding balance, payment due date, credit limit, and the minimum payment due.  This list provides you with the big picture of your debt.

Now that you’re aware of each of your debts, focus on one debt at a time.  Start with the one you owe the least on, and apply whatever you can to that single debt until it is paid in full. It is important to pay more than the minimum payment if you are able to.  This will keep you from paying more in the long run since credit companies collect interest on the remaining money you owe.  (Don’t forget to make minimum payments on all other cards at the same time!)

Next, prepare a budget that takes into account your monthly income, bills, and other expenses.  Keeping track of your purchases can help highlight unnecessary spending. To keep better track of your purchases, try online bill pay.  Enrolling in online bill pay helps to organize your payments, dates, and transactions.  Automatic bill pay also eliminates worry of missed payments. Some online bill pay sites track the categories that you spend most of your money on.  These trends can help you both understand your spending habits and set the best budget for yourself.

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