Step 3: Make a list of all the debt. The list should include:
- To whom owed (Payee);
- The pay-off amount;
- The number of payments you have left;
- Monthly payment amount;
- The interest rate;
- The due date.
Step 4: Now, it’s time to start creating a spending plan. Yes, it is a budget. Remember that a budget is not a constraint. It is a way to tell your money where to go.
Step 5: For the next 30 days, take a small notebook and write down every single amount you spend. For example, you go to a store and buy a candy bar, water, soda, etc. Enter the item you bought, the date, and the amount. At month’s end, see where those amounts fit in your budget. Then enter them. This will give you a very good idea of what you spend your money on.
Step 6: Perform surgery, cut up every single credit card you have, except for your debit card. Do not take out any more cards, lines of credit, or any other time of credit. This includes consolidation loans. If you pay-off all your credit card debt with a consolidated loan, you must make sure that you do not charge anything on those cleared cards. Otherwise, you’ll be in more debt. This is why it is very important to destroy those cards,
Step 7: Begin saving towards an emergency fund. Initially, strive for $1,000. Then, you will want to have eight to twelve months of living expenses.