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How can I begin the paying down debt when I'm in the hole?

How do I start this process while in the hole? This has been my biggest struggle in repairing my finances. I have some bills. I dont have MANY bills but enough. Where do I begin? My desire is to figure out what I owe and begin to pay down debt. What creditor do I begin with? I'm lost. Please help me..

 
Tia621

Asked by Tia621 at 2:01 PM on Aug. 19, 2009 in Money & Work

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Answers (6)
  • Make a list of all your debts, with the amount owed, and the interest rate. Start with paying off the one that has the least amount of debt. Add as much money as you can to it every month. Pay the minimums on the rest. In addition to that, contact each lender and tell them to lower your rates. Call every day if you have to. When the first debt is paid, take that amount that you have been paying and add it to the next lowest amount, until that is paid off. Keep doing it until you pay off all your debt. This system is called debt stacking. It is a way to keep things manageable and eliminates your debt the fastest. Paying off the one with the highest rate first doesn't usually equal a savings, depending on the amount of debt owed. Check out Dave Ramsey's Financial Peace University... best investment you will ever make in your life, and your children's lives.
    squish

    Answer by squish at 2:18 PM on Aug. 19, 2009

  • Start with a budget and cut the unneccessary things out. Then your first job is to get caught up on all your bills. Then you start paying down the debt. Dave Ramsey has a great book that explains a plan on how to do all of this. It's called The Total Money Makeover.
    feesharose

    Answer by feesharose at 2:04 PM on Aug. 19, 2009

  • call them and see if they can work out a deal with you. You may can show them your income and etc and they may can help you from there. Start one at a time. Dont buy any wants just needs. You have to do a budget. It can seem overwhelming but you will feel good once you start paying them off. hope that helps. Check out Dave Ramsey too
    Anonymous

    Answer by Anonymous at 2:05 PM on Aug. 19, 2009

  • I've seen on tv to pay off the the credit card that has the highest interest first. Send most of the money to that one and send the minimum payment to all the other ones in the meantime. Hope this helps!
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    mommy2joeynabby

    Answer by mommy2joeynabby at 2:11 PM on Aug. 19, 2009

  • Get the last two months bank statements. Go there it and write down were all the money is going, bills, food, house,car, phone, entertainment. Then write down each bill and how much you have to pay monthly. Start your budget there, total up the monthly payments. THen look at the other categories, does the food category have a lot of dinning out, or is there a generic brand you could get? THe house/rent payment can you afford to lower it/refinance? The car can you lower insurances, go to the minimum the state allows? Do you have more then 1 phone, do you need a cell phone? Entertainment, how much do you go out, can you rent instead of going to the movies, do you have perineum cable or basic, did you bundle everything to save a little? Call the phone and cable and such companies and tell them I need to lower my bills can you help me. I did and lowered my by $115 a month.
    DevilInPigtails

    Answer by DevilInPigtails at 2:13 PM on Aug. 19, 2009

  • Continued. .
    After you now how much you are spending, total it up and subtract it from you total monthly income. Are you in the red or black. Black you are good and then pay more were you can. Red, time to start getting ride of expenses, all the fat must go; cell phones, cable, DVRs, Going out. Slowly you will see that you have a little extra every month. Start with you highest interest rate item and pay the little bit there. When it is done then dump all the money you were putting into that on the next highest interest rate item, ect. . . . When they are paid off redo you budget and stick to it. It may take awhile but with each victory you will fell good. Good luck and stick to your budgets.
    DevilInPigtails

    Answer by DevilInPigtails at 2:18 PM on Aug. 19, 2009

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