NDSU Extension Service - Ramsey County


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Digging out of Debt

Digging Out Of Debt

Digging yourself out of debt can seem like an impossible task to complete. Don't delay taking action.  If, you feel yourself starting to drown in credit card debt and other payments, start tackling debt management before it worsens. The longer you delay ... the harder it is to resolve.

Start with paying all of your bills on time. The first priority you are going to want to get in line is to start paying all of your bills in a timely manner. Failing to do this will mean that your credit score won't be as good as it could be, and that will close a lot of doors for you in the future. Whatever you do, do not miss a payment. Late payments can really hurt your credit score, and thus make it even harder for you to secure more favorable financing. This can affect your insurance rates as well.

Next, keep VERY close track of your spending. A number of small amenities in your budget may have to be eliminated in order to make ends meet. Restaurants, movie theaters and other expensive entertainment can be substituted with libraries, art galleries and outdoor exercise.
Stop going out as much and put that money aside. In order to ensure that you are doing everything possible to pay your bills every month, you are going to have to make some sacrifices.  Budget your money wisely and limit how much you go out on a weekly basis.
As always, a second source of income can make a big difference to debtors. If you can earn just $500 a month extra, that's $6,000 a year that you can apply toward debt reduction.  Pick up extra shifts at work or try looking for another small part time job to help you pay back your debt fast.
Pay off your credit cards as soon as possible. Start paying off the one with the highest interest rate first. Mathematically, this will save you the most interest. However, if you have several smaller credit card balances, then you may feel like you're making more progress by paying them off one by one first.

Don't hesitate to get help if you need it. Negotiate with creditors and see if you can work out an acceptable settlement. Credit and financial counseling services can be invaluable resources and may be able to point you to options or ideas that you would never find out about otherwise. They can also start you on a debt management or consolidation program to help lower your rates.


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