Are you carrying extra credit card weight and then paying down your debt just to have it creep back up? It happens. Dodge the emotional traps that keeps you in debt by monitoring your spending habits. No matter how hard you try to reduce your debt, it’s important to develop a payoff plan to help you achieve and maintain financial fitness.
Don't stress over your debt. Deal with it! Start off by developing a customized payoff plan based on your current income and how much you can realistically allocate each month toward your payoff plan. Don’t be too aggressive with your payment(s), as this might create a need to resort to using a credit card…which is the last thing you want to do! Be enthusiastic about your payment plan, but be sure that it won’t set you back!
Here are some tips to creating a basic debt reduction plan:
· List all your debts (car loans, credit cards, money you may have borrowed from a friend or family member, mortgage loan, etc…) on a spreadsheet, a white board or a columnar pad. Include debt name, balance owed, minimum monthly payment, and the payment amount you can afford that is more than the minimum monthly payment.
· Commit to a monthly debt reduction payment schedule.
· As you pay one loan off, apply that payment amount to the principal portion of the next loan on the list.
Some people rack up new credit card charges once they have paid the balance due. Don’t fall into this trap. Stay on course! Applying the payments of your retired loans to your remaining debt will escalate your debt reduction efforts. It's exciting to put loans to bed, so update your plan monthly with the diminishing balances so that you can see all of the progress you've been making!
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