7 Simple Steps to Get Out of Debt
- Calculate your income. Make a list of your monthly income sources, including your salary (after taxes), any bonuses you incur on a regular basis, and child support or alimony payments.
- Make a list of all of your monthly financial obligations (fixed, variable and discretionary) including the amount of debt you owe and the interest you are paying.
- Prioritize your debts. Most people place their mortgage and car payment at the top of the list.
- Evaluate where you are spending your money every month. In order to make a change, you need to understand where your money is going.
- Create a realistic monthly budget. It is easy to spend too much if you don’t have a personal spending plan.
- Develop a realistic debt reduction plan. Can you trim any expenses?
- Consider one of the following solutions: Generate additional income. Lower or suspend investment contributions. Lower interest rates on loans or credit cards.
Now that you have created a plan, commit to it and before you know it, you will be debt free.