Paying off debt can be manageable if you begin with these steps:

  • Make the commitment.
  • Analyze the problem to understand how much debt you have.
  • List all of your debt.
  • Choose an action plan to reduce debt.
  • Evaluate your progress and make adjustments on a regular basis.

Here is an easy way to get started:

  1. List each creditor.
  2. Record the total amount owed.
  3. Fill in the minimum monthly payments.
  4. Divide the total amount owed to a creditor by the monthly payment and fill in the ratio in column 4 labeled Rapid Recovery Ratio. (This is how many months until you have paid off this debt.)
  5. Record interest rate.

If you have a credit card with high interest rates, it is important to contact your creditors and request an interest rate reduction. Many creditors will reduce your interest rate if you have had a good payment history.

Rapid Recovery Ratio Chart

The next step is to choose an action plan:

Debt Snowball vs Avalanche