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How to Eliminate Debt

By Edited Sep 27, 2016 0 0

Most people have some form of debt and we all want to get rid of it. From car and house payments to credit card bills and personal loans, these payments are eating away at our wallets and they never seem to get smaller. Let's take a look at a few steps to start eliminating these bills and become debt free.

Things You Will Need

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Step 1

Start with a plan. Lay out all of your bills and be sure to include routine expenses like food and utilities. I know we can't eliminate food and utility bills but they will factor into your budget. Add up all of your monthly expenses as well as your total monthly income and figure how much you have left over.

Step 2

Start small and organize your bills in order from smallest to largest. We will be starting with the smallest credit card or loan and eliminating it first. We then move down the list until they are all gone. This will not happen overnight but it will happen if you follow your plan. Take some of the extra money you have each month and apply it to the smallest debt while paying only the minimum on the others.

Step 3

Use a systematic approach to eliminate each bill. By paying minimums on large amounts and applying as much as possible to the lowest amount each month you will start to reduce the number of debts you have. For example: you have 3 cards with balances of $500, $1000, and $1500, instead of paying $100 on each pay the $30 minimum on the 2 larger ones and $240 on the smallest one. In 2 months the small one will be gone and you can move to the next one. Pay $30 on the larger debt and $270 on the smaller one. 4 months later you are down to only one credit card with a balance. Repeat this process until your debts are gone.

Step 4

Don't stray. Stay on track and do not alter your plan unless it is going to make the process go faster by paying larger amounts. If you stick with your original plan and use only the money you are already spending you can eliminate your debt.

Step 5

Don't take on more debt. Once you have followed these steps and made the decision to become debt free don't let yourself get caught up in it again. It is tempting to use credit and for some things like a home or car it is usually necessary, but for small purchases use cash to pay in full and keep your self free from debt.

To get rid of debt even faster, click to learn how to make some extra cash on your free time.


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