Steps to Getting Out of Debt

Floral Finance® 

1. Stop spending more than you earn.

It may sound obvious, but that's where you need to start. Keep track of every dime you spend for a month. Write it all down. Analyze your spending patterns. See where you can cut back. For most of us, it's not too painful to get our spending in line with our income.

2. Don't incur any new debts.

This one is self-explanatory.

3. Pay all interest and principle as it comes due on each debt.

In other words, pay your current bills on time. Don't get deeper in the hole. Meet your obligations.

4. Pay off your highest interest debt first.

Usually that means credit cards. They often carry interest rates of 18 to 21 percent. Take any extra cash you have each month and apply it toward your credit card bills. Of course, you also must either stop using the cards or start paying off all new purchases on your credit cards each month.

5. Pay off the next highest interest debt even faster.

Once you have paid off your credit cards, don't increase your lifestyle to spend what you were using to reduce the credit card debt. Take that amount and apply it as an additional payment on your next highest interest debt. You'll pay that one down even faster.

After the second debt is paid, use the amounts you were paying on both the first and second debts to go after the third.

You'll be amazed how quickly you can get out of debt once you get started.