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:
- List each creditor.
- Record the total amount owed.
- Fill in the minimum monthly payments.
- 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.)
- 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.
The next step is to choose an action plan: