Tackling Debt-Consolidation, Once And For All12:00 AM
The best way to consolidate debt varies by individual, depending on your financial circumstances and preferences. For some, the best way to consolidate debt may be paying off smaller balances first and then adding those payments to the bigger bills until those are paid off. Others might consider transferring balances to one credit card or getting a consolidation loan.
Here is my three step plan for you to reduce your debt on your own:
- Appraise your total debt - Collect all of your financial documents and credit card statements and check your annual credit reports. Then take a notepad and write down the balance, interest rate and monthly amount due for each of your debts. Include your auto loans, personal loans, payday loans, credit cards and any other debts. You should also make note of any annual fees on your credit cards.
- Set a budget - After you have collected the information about your debts, you should take a look at your monthly budget. Write down your monthly income after taxes and subtract your rent/mortgage payment from this amount along with other monthly expenses such as childcare, student loan payments, insurance, utilities and groceries. Once you have subtracted all of your expenses, calculate how much you have left to pay off your debts.
- Make a plan - Now that you have a better understanding of your financial situation, it’s time to create a plan for reducing your debts.