How-To Guide: Reduce Your Debt
By Motley Fool Staff | More Articles
Millions of Americans out there have paid off significant credit card debt. Now it's your turn. In short, your get-out-of-debt goal is to assess, organize, attack, and then lather, rinse, repeat until those balances are down to $0.
Don't worry; we're with you every step of the way.
Here's your six-step action plan for getting your debt under control. To help you, we've borrowed several worksheets from the Fool's old personal finance service, TMF Green Light. As you'll see, most of the steps have corresponding worksheets to guide you through the finish line. Take it at your own pace, and check off each step with a thick-line Sharpie when you're done. (Trust us, it's satisfying.)
1. Stop using your cards.
The last thing you want to do with credit card debt is add to it. Take all your credit cards out of your wallet or purse and leave them at home - safely out-of-reach behind a major appliance, or trapped in an ice block in your freezer. (You may
want to keep one for emergencies. And no, a really great sandal sale or a cool new Bluetooth-enabled gadget does not qualify as an emergency.)
2. Assess your debt-to-income ratio.
It's time to face those debt demons and get a bird's-eye view of where you stand. Some debts, like mortgages and student loans, are just part of life. But the other ones (credit cards, car loans -- a.k.a. "bad debt") can bring down your financial house of cards with an innocent sneeze. Use the PDF-format "Debt-to-Income Ratio" worksheet to add up the latter and see where you stand.
3. Dig into the details.
Don't just throw yourself at a mountain of debt without preparation. Knowing the dirty details about your enemy is half the battle in conquering credit card bills. How many cards do you have? What interest rates do they charge? Which have the highest balances? Are the payments flexible? Is the debt "secured" or "unsecured"? Once you download and complete the PDF-format "Get to Know Your Debt" worksheet. you'll know exactly what you're facing.Source: www.fool.com