How to Become Debt Free
- 1). Organize all of your debts from smallest to largest. Do not leave out any amounts, no matter how large or small. This step is extremely important in becoming debt free. It helps you to clearly see what your current financial situation is.
- 2). Pay the minimum amounts on all your debts, except for the smallest one. Any additional month left over at the end of the month should be added to the smallest amount until it is fully paid. Once the smallest amount is paid, move to the second smallest amount, paying the amount from the previous smallest balance AND the minimum on the second smallest amount.
- 3). Continue following step number two until you are debt free. Remember that each time you pay off one amount, the amount you pay on the next debt increases by whatever amount you were paying on the previous debt. This will really kick start your ability to become debt free.
- 4). Cut up your credit cards. You do not need them. The credit card industry has done a great job of making you think that you cannot live without them. If you cannot stomach the thought of cutting them up, then please STOP using them. You will never get out of debt if you continue to increase the amount you borrow.
- 5). Make a budget and stick to it. Determine how much money you make. Then assign each dollar from your check a certain job. Make sure you spend all of your money on paper before the month (or week) starts. If you fail to plan, you plan to fail. Becoming debt free takes some effort.
- 6). Revisit your budget at least every two weeks. Make changes as needed. Understand that the first few months will most likely not work out the way you had planned it. With time, patience, and effort you will become debt free.
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