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Pay Down Debt

Develop written plans for living expenses and credit payments for the next six months. Use the income and living expense worksheets to estimate income and living expenses. Record all debts and information on the credit payment worksheet.

Now that you have a written picture of your financial situation, you are ready to begin to evaluate your situation and make decisions about the best use of dollars to **Pay Down Debt Worksheet** and get to more solid financial ground.

One of the first decisions you will make is who to pay first. After you make those decsions and know what it costs to live, you can start working with your Pay Down Debt Plan.

Two ways to develop a plan for paying off debt. Look at:

  • Interest rate. The debt with the highest rate gets any extra money for debt payments.
  • Total amount owed. The debt with the smallest remaining balance gets any extra money for debt payments.

You may be able to negotiate with creditors. This may be possible only with unsecured debt. If bankruptcy is an option, creditors may also be more willing to negotiate. Generally it is easier to negotiate before the debt is turned over to a collection agency. Don't wait, if that is a possibility.

Once you can get debts paid off, how do you stay out of debt?