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Reduce Debt
1. Get organized to help you gain control. 
 
  • Write down when each monthly bill is due.
  • Designate a drawer or filing cabinet for bills and financial statements.
  • Label file folders for bank statements, tax documents, credit card bills, medical receipts, mortgage statements and other records.
  • Review your bills every week or two; not all the time so you become overwhelmed, but often enough that you stay on track with your plan.

2. Make a list of all of your creditors from the largest amount owed to the smallest, and make a strategic plan for
repaying them.  

  • Put as much money as you can toward the smallest bill. When that is paid in full, you’ll feel a sense of accomplishment and realize that you are working toward your goal. 
  • When your smallest bill is paid in full, add that monthly payment to what you’ve already been paying on the next-smallest bill. The larger amount helps you pay off that bill faster.
  • Repeat the process every time you pay off a debt, creating a “snowball” effect as you reduce debt faster and faster.   

 3. Make every payment and don't miss a month.

  • Paying on time avoids late charges and higher interest rates, which work against you in lowering your debt. This habit also helps raise your credit score, which saves you money when applying for a home mortgage.
  • If you cannot make a payment, communicate with your creditors immediately.  

 4. Add to your savings account monthly, even if it’s a small amount, as you’re paying down debt.

  • This develops the savings habit and also helps eliminate the need for more debt when you encounter unexpected expenses. 
5. Limit or eliminate credit card use. 
  • Remember your credit card is actually a loan that must be paid back with interest. In the end, credit cards only increase debt.

  • Make everyday purchases with cash only (cash, checks, debit cards). 
6. Celebrate each time a debt is paid in full. 

7. Stay the course. Freedom from debt will come.
  • Following the tips above can help you get out of credit card debt in 2 to 10 years, compared to a lifetime of making only minimum payments.
8. Contact Consumer Credit Counseling Service of Northeastern Iowa to help you dump debt even faster. 
  • In many cases, we can help you get out of credit card debt in 2 to 5 years, about half the time it could take on your own. 


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