The road to freedom from debt begins by being fully aware of just how much debt you have. Begin the process by making a comprehensive list of all your debt amounts, as well as details like interest rate, monthly payment amount, and due date. While you’re at it, take a look at the areas where you’ve overspent in the past; be honest with yourself and resolve to make changes to your budget.
You can also take advantage of your free yearly credit reports from each of the three credit bureaus to verify debt amounts and make sure there are no errors. You might also want to look at your credit score as an indication of where you currently stand.
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High interest rates can dramatically slow down your debt repayment process. After you’ve made the list of your debts, plan to first repay the ones with higher interest rates. Consider calling lenders and asking if they can help you out by reducing your interest rate — many will agree to do so. Look for introductory credit card offers that allow you to transfer balances at a low interest rate. You might also consider taking out a personal loan to consolidate high-interest debt at a lower rate.
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In addition to paying back your high-interest debts first, also pay off your smaller balances with any excess funds you can spare. This will help create momentum and expedite the repayment process. One of the most harmful things you can do to your credit is skip payments or pay late. Set up reminders or sign up for autopay online with as many bills as possible. Finally, create a vision of where you want to be in the future financially, once you’ve repaid your debts. Whether your goal is to buy a home, buy a car, or start a college fund for your child, having a positive outcome to work toward can be highly motivating.
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