When many individuals start the process of credit restoration, the topic of reducing your debt, is part of the conversation. You need to make a budget and outline goals to hold yourself accountable to your budget. Credit cards, mortgage and car payments, student loans, savings… where do you start? Active credit lines are the top priority and old debt should address afterwards.
Add in your debt liabilities and rank them by the importance of the pay-down. Taking into consideration the current amount of money you are paying towards these accounts. The use of a debt snow ball accelerates the pay down of these debts. Once you pay off that first obligation, the amount of that payment is applied into the next line of debt. By consistently making the same payments you are making today- you will not only pay down your debt liabilities faster, but you will also skip the extended months of making high interest payments.
Your budget is a clear guide on how to more efficiently pay down your debt. You must stay on track and follow the goals you have outlined in your budget to gain results. Remember, even if you get off track, you can review your goals and reestablish a budget. There are automated programs that allow you adjust your budget and streamline debt reduction with a click of a button. There are many ways to improve your financial literacy that can help with reducing your debt.
If you have questions about how to improve your financial literacy in reducing your debt you can contact me>>> Carl Blackstone, Financial Empowerment Team