I’ve relied on my credit card far too much this past year. I’m now in some considerable debt. Nothing life-altering, but I’m going to have to seriously save these next six months to be comfortable again. What would you suggest be my next best steps to get out of debt (and save my credit score)?
A great option to look into is The Snowball Plan. It’s very concrete and will help you manage your debt.
Begin with listing all your debt–the amount you owe, the term of the debt, and the interest rate of each piece–out for you to see an overview. Then rank your list in one of two ways: with either the smallest amount on top, or the highest interest rate on top. There are good reasons for using both methods.
Beginning with the smaller balances first allows you to cross them off your list quicker, whereas starting with the higher interest rates will save you more money. Once you have your preferred method, begin putting every extra dollar you accumulate on the debt at the top of your list. Make only minimum payments on the rest.
As you pay each one off, add the amount you were paying on that debt to the next one on your list, continuing to make only minimum payments on the rest.
In this way, you will systematically pay all the debt off. Of course, in the meantime, try your best not to add anything to your current level of debt.
Best of luck!
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