Credit Advice: Steps to Get Out of Debt

You can dig yourself out of debt and stay out of debt by sticking to a monthly budget. Keep the following tips in mind when developing a workable budget for your family.

1. Try to pay for purchases with cash or checks until your credit card balances are paid in full.

2. Determine the total amount you owe creditors.

3. Determine your priorities according to creditor by deciding who needs to be paid first. Your first set of priorities should be credit cards with the highest interest rate, typically department store cards. Look for charges for late payments and minimum payment requirements.

4. Transferring your balances to one creditor can be helpful in keeping track of your progress. Investigate any opportunities to transfer your existing balances to a card with a lower interest rate. Be aware of the time limitations associated with promotional cards offering an “introductory” low interest rate.

5. Reduce your spending and set a realistic budget. You may have to tighten your belt and say no to some of those extras for a brief time period.

6. Set goals. Once you’ve achieved them, reward yourself with small indulgences.

7. Once you’ve eliminated your debt, revise your budget and stick to it.

8. Remember to spread your holiday shopping and spending throughout the year to take advantage of sales and to avoid overextending yourself.