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STEP 1: Make a list of all of your credit cards, loans, and other debt, along with the amount of money owed on each one. Input the numbers on a spreadsheet or somewhere you can easily reference it.
STEP 2: Using Dave Ramsay’s idea, aim to pay off the smallest amount first. Once you pay off the smallest bill, transition whatever you were paying towards that bill to the next credit card or bill, and so on until you’re debt free.
STEP 3: You many need to cut spending to focus on paying down debt. If you don’t have a budget or clear understanding of how much money is coming in and going out each month as well as where it is going, schedule a time to review and capture that information this week.
STEP 4: Look for ways that you can save money. Eat out less often, take your lunch to work, forego your daily latte (or decrease it to Mondays and Fridays only), look for ways to carpool or take public transportation to spend less on gas and tolls, pick up a shift or two at your favorite restaurant, etc. For more ideas, Google “How to get out of debt”.
STEP 5: Make a list of how you will reward yourself once you are out of debt (without getting right back into it). Consider starting to save the amount you’ve been putting towards debt in an account for a down payment on a home, a remodel, a new(er) car, retirement, college tuition, etc. Talk to your human resources person at work about adding to your 401(k). If you don’t have a lot of information about how to save for retirement or how much to save, talk to a bank or a financial advisor.
