Are you struggling with debt? Are you fed up and ready to do something about it? Is your debt weighing you down? Perhaps its time to go on a debt diet.
If you are seriously ready to gain control of your finances, I have some ways to help.
1. Figure out your total debt. Do you have any idea how much you owe? Do you know what the current interest rate is on each of your credit cards? Are you able to figure out how long it is going to take you to pay off your debt? Collect all of your monthly statements and make a list. When you have a clear picture of your financial obligations, you will be able to make better decisions about how to manage it.
2. Stop spending. You need to start by figuring out where the money is coming in from and then where it is going. Most people discover that they are spending more than they are making. Figure out what things you could easily do without and stop spending money on them.
3. Prioritize your debt. There is a difference between secured and unsecured debt. Secured debt has an underlying asset, such as your home or car that can be repossessed if you don't make payments. Unsecured debt does not have assets backing them up. The worst that can happen is that your credit score drops. Make sure to pay on the secured debt first. Be sure to pay your taxes to keep Uncle Sam happy. Then, pay those credit cards with a focus on those with the highest interest rates. Try to pay more than the minimal balance.
4. Repay your debt. First you want to reduce your interest rates. Start by learning your credit score by getting a copy of your credit report. You are entitled to a free report once a year from the various reporting agencies. What is your FICO score? If it is not above 720 (a perfect score is 850), work to raise it by paying all of your bills on time and not applying for any new cards. Every time your apply for a new credit card, your FICO score goes down. Every time you make a late payment your FICO score goes down. Every time you cancel a credit card, your FICO score goes down. Take steps to avoid doing these. With a higher score you can contact a Customer Service supervisor and attempt to get a better rate. You could refinance a car loan for a lower rate. Consolidate student loans, refinance your mortgage. Then, put as much money as you can toward paying off those bills.
4. Create a monthly plan. Attempt to spend no more than 35% on housing expenses (including taxes, insurance, upkeep and your mortgage). Attempt to spend no more than 15% on transportation (including gas, insurance, car payments). Put 10% of your income away for savings. Put 15% towards repayment of debt including credit cards and 25% on other aspects of your life.
5. Earn more money and make hard choices. Ask for a raise. Sell some valuable items. If you are unable to do so, you might need to sell your car or look for a less expensive place to live.
Do you need to go on a debt diet? You might want to start with my U CAN DO IT BUDGETING SYSTEM. It is an easy 6-step process to figure out what is coming in, what is going out and where it is going. Simply visit my ABS Store right here on my website. You can download it immediately and begin your debt diet today!
In the meantime, happy organizing!