I found an article by Kerry Hannon in the Winter 2009 publication by USAA Magazine and really liked what it offered. I hope it will be helpful to you. Not everyone can be a member of USAA, but I am, so I am sharing with you the information I took from the article they published.
Sometimes it only takes a small stumble to wind up in deep debt. Ready to get out? A USAA Member and a financial expert point you in the right direction.
10. Budget and Save – Pay yourself in a savings account like you would pay a monthly bill collector. You will quickly learn not to miss that 10% of your income each month. Systematically adding money to a savings account is a must.
9. Cut Spending – Trim those grocery bills! Look at downsizing options or getting a roommate or move in with you.
8. Track Daily Expenses – Write down everything you spend money on. Most of the time it’s not the big items that get you into trouble. Little expenses add up.
7. Set Goals – You can make a plan to exit from that revolving debt. Quit using the credit cards and pay cash for items. Make a plan for paying down the debt. Some good short term goals are paying down your debt by $1,000 or paying off one credit card at a time.
6. Take a Second Job – Getting some extra income can pay off debt quicker. Cutting expenses and increasing income works to reduce debt.
5. Pay Off High Interest Loans Systematically – Don’t pay off the smallest debts first just to see progress. Work on the larger ones.
4. Pay Bills Automatically Online – Paying bills online will help you budget and get things paid on time. Paying bills on time increases credit scores.
3. Find Out Your Credit Score – A good credit score can translate to loans when you need them and thousands of dollars in interest savings. Scores range from the 300s to 850, with most people falling in the 600-700s. Strive for a score of at least 720 to 740 to get better rates on credit cards, auto loans and mortgages.
2. Fix Credit Report Errors – Regularly check your credit report so you know if there are any errors you need to correct. Go to the official site, AnnualCreditReport.com, to request a FREE Credit Report from each of the three reporting agencies – Experian, Equifax, and TransUnion – every 12 months. Your credit score doesn’t come with the report. You’ll have to purchase your score from each bureau.
1. Do Periodic Checkups – Assessing your situation regularly should be part of your financial regimen. Getting out of debt is possible, but it takes patience.