- 1). Lay all your debt statements on a table or desk and use a calculator to add the total.
- 2). Review your monthly budget by writing down your income and your recurring (necessary) expenditures. These include housing, transportation, food, insurances and utilities.
- 3). Deduct monthly expenses from your income to determine your disposable income. Divide disposable income by your total debt. For example, if you owe $2,000 and you have $200 in disposable income each month, it'll take approximately 10 months to pay off debt.
- 4). Increase household income. Don't let lack of extra money keep you in debt. Get creative and find ways to generate money to dissolve financial debt. Get a part-time job or start a home-based business.
- 5). Cut up your credit cards to stop unnecessary spending and do not apply for new credit lines. Keep one card for emergencies. Place this card in a secure location that's not easily accessible, like a locked safe.
- 6). Negotiate better rates with creditors. Paying a high interest rate on lines of credit prolongs debts because the majority of your payments go to paying down the interest charges. Pay less interest by calling creditors and asking for a lower rate. Aim to make higher payments to pay down principal balances quicker.
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