Here’s How To Do It
- Step 1: Know how much debt you have. When you have debt -especially a lot of debt - it’s easy to feel ashamed, like you’ve failed at being responsible. And those feelings of shame can keep you from facing your debt and making a plan to pay it off. Sure, it’s tempting to set aside late notices and collection letters for another day, but the fact is, the longer you delay in facing your debt, the worse it will become. Plus, how can you create a path to a debt-free life without knowing how far you have to travel? Be brave! Gather all your debts and make a list of all you owe. It’s critical to the next steps.
- Step 2: Contact your creditors. Let’s face it: No credit card company wants to give up on debt or pursue it through costly legal channels if they don’t have to. In most cases, they’re more than happy to work with consumers to help them establish a repayment plan that can help the card company get what it needs - cash - while helping you avoid collections, legal action and a tumbling credit score. Plus, most credit card companies are much more pleasant to deal with than you may think (and usually much more pleasant than collection agencies). Make a list of the credit card companies’ toll-free numbers and start calling.
- Step 3: Understand the “snowball” system. Basically, the snowball system goes like this: Once you pay off one debt, you take that monthly payment and add it to another debt to speed up the repayment process. And once that debt’s paid off, you take that larger payment and apply it to the next in line … and so on. If you really want to get a leg up on your finances, once all your debt is paid you can divert all your monthly payment amount - or a good chunk of it anyway - to a savings account for emergencies so you don’t wind up maxing out your cards again.
- Step 4: Get educated. We learn a lot in school, but personal finance is rarely a subject that’s covered in any great detail - which is unfortunate since personal finance is a subject that affects all of us throughout our entire lives. You can make up for that learning gap with a little DIY financial education. Check out Oklahoma Central’s financial education resources page and learn how to create your own financial security so you can avoid accruing massive debts in the future.
Being financially secure starts with you and it starts today. Visit Oklahoma Central Credit Union and learn how we can help you create a better financial future beginning now.