American debt is at an all time high right now. The average credit card debt per household is $16,000(source: credit cards.com). This debt can cause many problems for people and their families. For most people who are stuck in the financial bind and looking for a way out might not know an answer. So here are five easy steps to help you or someone you know eliminate debt.
Step 1. Get rid of your credit cards.
If you have credit cards with outstanding balances destroy all of them except maybe 1 or 2. Now any new charges you make to these couple cards need to be paid off every month. Most importantly is do not accumulate any more long-term debt.
Step 2. Come up with extra cash every month.
Now that you have started to gain control of your financial situation this shouldn’t be impossible to come up with anywhere from $100-$200 extra every month. Now if you cant come up with the extra money every month getting out of debt might be impossible. Find ways to cut costs every month, it will be worth it when you don’t have to worry about that nasty debt anymore.
Step 3. Apply the extra money to your debt.
Now you will take that $100-$200 and apply it to only one of your credit cards. So overall you will be paying the minimum balance every month plus the extra $100-$200 on the ONE credit card. Remember to pay only the minimum amount on the other cards, you don’t want to pay a little extra on all of them it amazingly never works.
Step 4. A credit card is paid off.
Now that card is paid off. YAY! Alright now you will take the money you were paying on that card and apply it to the next card so all together you will be paying the minimum on card two plus the amount you were paying on the first card. This will add up much faster. Just keep repeating this process over and over until all of your cards are paid off. But you can NEVER accumulate any more long-term debt in this process. So remember with each debt paid off you will apply that FULL amount to the next debt plus the minimum payment. You can see right now that every time you pay off a card the next debt will get paid off much easier.
Step 5. No more credit cards
Now that all of your credit cards are paid off you will just continue this process with any consumer debt you have. This includes any toys you might have financed maybe a 4 wheeler a dirt bike something like that eliminate all of those payments. Then eventually you will make your way to your car payment. Once that is paid off you will apply every bit of the extra money you have accumulated paying off the debt and apply it to your house payment. Once all your debt is paid off the best thing to do is never get back into the long-term debt situation. If at all possible buy everything with cash this will help lead to being in control of your financial life.
If you follow these steps you will be surprised at how fast your debt can be eliminated. It will feel so good when you go from thinking you will be in debt for 40 years to life but instead you pay your debt off in about 3-10 years. I hope this helps anyone who is in a tight situation good luck.