Every person that has accumulated a lot of debt dreams of the day when he or she has paid it in full. If you are having trouble with managing your money and you feel like you have to make more payments during a month than you can actually handle, then stop worrying or dreaming of better days and take action. Before you decide on a method to pay off your debt, first you will need to know the exact sum that you owe.
Therefore, take a pen and paper and write down every expense that you are normally make during a month. Make sure that you include all the bills, loans and other expenses, on groceries or clothes for example, that you normally have to pay for. After you wrote down all the payments you need to make, then you should arrange them into three columns. Leave the list of monthly expenses on the first column, write down the minimum payment you are able to make in the second one and on the third column note the interest rates for each of the expenses.
In order to complete your debt list, your next step is to ask your money dealer to provide you with a copy of your credit report. According to the American legislation, you have the right for a free credit report copy once per year, however if you already asked for one this year, pay the fee and obtain the report. After you received your report start looking for older debts that you no longer remember you had or any charge-offs and add them to your debt list.
At this point, it is advisable that you calculate the exact earnings you make during a month. Before you calculate how much of the loans you can afford to pay during a month, establish a household budget where you add the bills and the money you spend on grocery and other necessities. Subtract this budget from the total sum of your earnings and you will obtain the maximum sum that you have available for paying off the debts.
From the remaining sum, check if you can afford paying the minimum amount for each debt. If you are unable to make the minimum payments, then you should consult a money management professional. However, if you are able to pay off and you even have some extra cash left, then continue to pay these sums until you get debt free.
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Michael writes on credit cards and related topics, including credit card debts and how to cope with them. |