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The_ABCs_Of_Getting_Out_Of_Debt

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					The ABCs Of Getting Out Of Debt

Getting out of debt isn't easy, but getting started on the process is.
The amounts you owe may seem too big for you to ever pay off and so you
feel frozen, as though you don't know where to begin. Luckily, there are
some easy, basic steps that will help you kick-off the process so you'll
know exactly where you stand and what you need to do to get your finances
back on track.

Tally Your Debt

The first step towards getting out of debt is determining how much you
actually owe. To tally your total debt, find your most recent statements
from all of your creditors. These can include credit cards, student
loans, mortgages, car loans, business loans, and anyone else you owe
money to.

Add up the amounts you owe each lender. Subtract any payments that you've
made since receiving the statement and you'll have the total amount you
owe right now. An accurate snapshot of your financial situation is
important.

You'll also want to add up the amount that each lender wants you to pay
each month. Start with the minimum they require, so you can determine the
monthly obligation that you absolutely must meet.

Determine How Much You Can Pay

Once you've totaled your debt and caught your breath, you'll need to
determine how much money you can afford to put towards your debt each
month. Add up all of your sources of income.

Be sure to include income from unconventional sources, like items you
sell on eBay or profits from your band's album. However, be realistic
about these and only put down what you know you can count on.

Your total here will be your monthly income. Subtract from it all
necessary expenses, like rent, food, child support payments, etc. What
you have leftover is the amount you can put toward your debt.

Figure Out Your Payment Schedule

Hopefully, the amount you came up with in the second part of your
calculations is equal to or larger than the amount from your first
calculations. In order to effectively work toward getting out of debt,
you'll need to be able to make payments on each account every month. If
you won't be able to do that, you'll need to get some professional credit
counseling to continue the process.

As long as you can make your minimum payments on each lender's account
each month, you should be able to work towards getting out of debt. From
the total amount you have to put towards your debt, subtract the amount
that will be put towards making minimum payments on each account.
Anything you have left over now is extra. Instead of spending it on
yourself, choose one lender's account to put all of your extra money
towards. Many people choose to start with the account where they owe the
lowest amount. Paying extra on this account will help you pay it off
faster. Once it is paid off, you will have even more money to put towards
another account. In this fashion, you will be able to achieve your goal
of getting out of debt.

				
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