Pay down your debt
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EmailA spending plan is a key part of eliminating debts.
Bills, food costs, repair costs, gas prices, it can all be overwhelming at times to pay for everything! So how can you ever hope to pay down debts you owe on credit cards, car loans, student loans, etc. while spending money on every day expenses. The key is having a plan to pay down debts.
A plan helps to manage your spending each month so debt reduction becomes part of your monthly expenses. For example, after determining your total available income each month, list each of your bills including rent or house payment, all loan payments, credit card payments, all utility bills and estimate your other expenses including gas, food, clothing, etc.
If you have more expenses than income, you will need to determine how to decrease your spending. If you have more income than expenses, then you can put some extra money towards debt. One way to do this is to select the debt with the highest interest rate and put some extra money such as $25 or $50 each month with your payment. Another idea is to start with the debt with the lowest balance and put the extra money with that payment. Use a debt recovery worksheet to keep track of each creditor and how much you owe.
Use a credit card repayment calculator to help determine how much you should pay each month in order to eliminate credit card debt. By increasing monthly payments slightly and not charging any more on the card, the debt can be eliminated faster and the amount of interest paid will be reduced.
If you have extra income occasionally, such as overtime pay, a part time job or an income tax refund, apply some or all of it towards credit card debt or other loans.
For other information about spending plans and credit and debt go to the MI Money Health website at Michigan State University Extension.
