Steps to Get Out of Debt

1. Know who you owe

• Get a copy of your credit report.
• List all outstanding debt to include the name of creditor, balance and APR.

2. Set SMART Goals around getting out of debt:

SMART goals are specific, measurable, attainable, relevant and time bound. For example, pay off $5,000.00 in credit card debt within two years.
 

3. Implement the best strategy

• Power Pay – develop customized plan to stop adding to debt and once a debt is paid off, allocate the funds to another debt. Pay the lowest balance or highest interest rate first.
• Refinance your current loan for a lower interest rate and monthly payments. This is ideal for mortgage and auto loans and improves cash flow to pay down other debt.
• A debt consolidation loan can be advantageous if you don’t take on more debt after consolidation. This provides a definite time period to get out of debt. 

4. Stay out of debt

• Implement the PYF principle (Pay Yourself First).
• Have an emergency fund for unplanned expenses (car repairs, medical expenses, home repairs, etc.) or loss of income.