This does not mean you cannot spend another dollar until all debt is paid off. Just spend less and keep your spending under control. Trade things for less expensive options like staying in for dinner and renting a movie over going out or finding free activities over options you would have to pay for. This also means putting your plastic on hiatus and sticking to a cash-only budget.
Need tips on how to lower your monthly bills? Learn more.
Organize your debt
Take a hard look at your debt. How much is it? What are the interest rates? What is the minimum due per month? Put it all on paper (or a spreadsheet) together. Once you are looking at all of it, you will truly know the hill you have to climb. Don’t get overwhelmed here. You can tackle them one at a time until you get them all knocked out.
Set a budget
Once you know your debt, you have to formulate a plan to pay it off. Of course you still have to eat and pay your monthly bills, so you will have to set a budget. Add to your list of debt your monthly reoccurring bills (rent, utilities, insurance, etc.). This will give you a clear picture of all of your expenses.
Start paying it off
Put your plan into action. You know exactly where you stand on everything. You know how much money goes to your expenses, the minimum that has to go toward debt and how much you have left. This is where you need a strategy to start really making a dent in the debt. There are a couple of schools of thought here and you are the only one that knows what is best for you.
To pay your debt down while paying the least amount of interest, you would want to take all the extra money you can and apply it toward the debt with the highest interest while paying the minimum on the others. Once that debt is paid in full, you move to the next highest interest until you have paid through all of your debt.
If you need to see progress more quickly to help keep you motivated, put all of your extra money to the smallest debt until you get it paid off and then move to the next larger one until you have everything paid.
If the holiday season has left you terrified about logging in to peek at your credit card account, it’s time to think about cutting back on your spending and putting a plan into action. At Oklahoma Central, members have access to free, confidential financial counseling with our financial capability partner, GreenPath.