- Create a budget. List all of your expenses and income. Categorize each one. Do not simply list bills, but use your checking account as a guide to list and categorize where every single dollar earned is spent. Analyze your spending once complete. Is there anywhere that you can cut costs? Can you call your service providers and request lower rates or reducing services to save more money? Is there any spending that can be reduced to create more money to funnel towards credit card debt?
- Make sure that you have two to three months of savings in place before you begin your debt reduction plan. If not, when you run into an unexpected expense you will lose any ground that you have gained by running your debt back up again. Hold a garage sale or find odd jobs to earn extra funds to help your cause.
- Line up your credit card debts on a sheet of paper, from the card with the lowest monthly payment to the card with the highest monthly payment. Start funneling every single extra dime toward the card with the lowest monthly payment, until that card is paid in full. Now, add that minimum payment, along with any extra funds, to the card with the next lowest minimum payment. Start paying that amount until that card is paid in full. Snowball your payments until all debts are paid in full. Continue to live as if you had that large monthly bill as long as possible after the debts are paid and place that extra money into savings to prevent you from having credit card debt in the future.
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