Debt Boot Camp: 5 Things You Must Do Now!

Credit cards. Car payments. Home equity loans. No matter what kind of debt you have, working yourself out of it can seem overwhelming, especially as your balances grow.

It is possible to reduce and eliminate your debt. Don’t expect it to be a quick fix, though; paying off debt requires patience and perseverance. Below are five essential steps that will put you on the path to a debt-free lifestyle.

1. Cut up your credit cards. Now.

Credit cards encourage a “gotta have it” mentality. It is too easy to keep spending with a credit card in your pocket or purse. Adding more debt to an already daunting situation makes the situation worse. Keep one card for emergencies, and get rid of the rest. For security purposes, don’t just throw the card in the trash. Cut it into tiny pieces, or – better yet – shred it. Most personal-sized shredders have a slot for credit cards.

2. Face facts: Make a list of everything you owe.

It can be difficult to face our debt head-on. Most of us prefer a “head-in-the-sand” approach to managing our money, especially where debt is concerned. Make a list of everything you owe. On your list, write down the name of the person or company you owe, the outstanding balance, and the minimum payment due every month. Be sure to include credit cards, personal loans, automobile loans, and mortgages. Having a clear picture of your outstanding debt will help you keep the bigger picture in mind as you work towards paying it off.

3. Pay your bills on time.

This may seem like a no-brainer, but late fees and interest charges can really add up. Every time you receive a bill, mark its due date on your calendar. You’ll be able to see all of your soon-to-be-due bills at a glance.

4. If possible, make more than the minimum payment every month.

It may not seem like it, but adding even an extra $20 to your monthly payment will help you reduce debt more quickly. This will help decrease interest charged and reduce your outstanding principal balance.

5. Write it down

For the next 30 days, write down every purchase you make. This will help you identify places you might have “money leakage.” Identifying and eliminating money leaks will free up extra funds to use towards your debt.

No matter how much we wish for it, most of us with debt are never going to hit the big jackpot and pay off our debt in one lump sum. We’re going to have to chip away at it little by little. However, with a little time and patience, you can get rid of your debt.