01Total All Your Debts
Include credit cards, charge cards, student loans, car loans, medical bills, home equity loans, personal loans and any other debts that you may have.
02Reduce Your Rates
Contact your credit card companies to ask for a better interest rate; look into consolidating your student loans (if you haven't consolidated them already); and check to see if refinancing your mortgage makes sense.
Sound like a lot of work? Just remember: lower rates, means less for you to pay.
03Separate the Good from the Bad
Divide your debts into "good debts" and "bad debts." For the purpose of this exercise, consider good debt to be any debt that you took on for something that you expect to go up in value (your house, your education, your business) and bad debt to be any debt that you took on for something that you expect to go down in value (your car, furniture, meals out, vacations, clothes).
04Pick a Debt to Tackle
Look over your list of bad debts, and decide which one you want to tackle first. It could be your smallest debt, your debt with the highest interest rate – the choice is yours, so decide what would motivate you most.
Then, select an order for paying off your remaining bad debts.
05Dive into Your Plan
Make the minimum payment on all your debts, and apply as much money as you can to the first debt on your pay off list. Do this each month until you wipe out your first debt. Then, start again with the next debt on your list. Keep going until all of your bad debts have been paid off.
06Go After Your Good Debts
Now, it's time to go after those good debts. Pick one to tackle first, and repeat the same process again.
07Build a Better Future
Get Out of Debt Checklist
Want to get out of debt, but not sure where to start? Begin with this checklist. Let's take it step-by-step.