Paying off your debt is simple, you must reduce your spending and put the additional money toward your debt payments. Apart from your fixed monthly bills such as mortgage and other payments, you likely don’t have an exact estimate of where you spend most of your money.
1. Determine where your money goes. In order to get your debt under control, you must initiate by determining your expenses. For a month, note down your spending pattern even if it consists of $5 coffee and cookie. That way you can simplify how much of your spending is fixed and how much varies. It will help you analyze your variable spending pattern.
2. Eliminate any extras. Match your expenses with your monthly income. If your expenses are less than what you earn, utilize the additional money as your debt payment. If it transcends your income, you will have to trim your variables.
3. Lower your fixed expenses. You should start off by lowering your fixed expenses. Initiate by taking steps towards getting a lower interest rate for your mortgage or if you have a good payment and credit history, consult with your credit card company to lower your interest rate that you’re currently being charged with.
4. Try to amplify your income. Examine ways to supplement your income. If you get huge tax return each year, this means you’re being charged too much on your income.
5. Record your debt. Prepare a list of all your debt. Align them in interest rate order, highest to lowest.
6. Pay off the highest rate first. Try to focus on paying off a debt with the highest rate so that you can get rid of the big burden that’s holding you down. Once that it done, focus on the ones with low rates and gradually pay off all of them.