Linda & Ryan Lowe | RE/MAX Centre Realty | 814-231-8200 Ex. 305/352

1. Stop adding to your debt: The first step is to stop adding to your outstanding balances. Try to keep one credit card and make that a credit card with the lowest credit limit.

2. Take an inventory of your spending habits: If you haven't already done so create a list of all the places your money goes every month - rent, credit cards, utilities, food, car payments, student loans, gas, insurance, charity, etc. Next, split the list into two, separate lists... The first list includes items you will always have to pay (e.g. utilities) The second list includes the debts you can pay off (e.g. credit card)

3. Eliminate the largest debts first: First, make the minimum payment for every bill. Second, make an extra payment for the one item that is on the top of your list. Repeat monthly until the item on top of your list is paid in full. After you paid off the first item take the money you were using to pay it off and apply it to the second item on the list. Knock off each #1 item every month until all balances are paid off in full.

4. Cutting expenses and making the payment: If you spend $100/week on groceries try to spend $5 fewer next week. Do you buy a latte every day before work? Why not treat yourself to one special beverage each week and throughout the week drink the office coffee (with a special creamer you bring from home)

5. Prepare for the unexpected: Set aside some money you save from cutting your expenses and put it into a special savings account that is created for the unexpected expenses (e.g. car repairs or medical bills)

6. Lower your interest rates: Contact your credit card company to see if they can offer you a lower interest rate on your card. If not, shop around for a card with a lower rate and transfer your balance to the new card. See if your local bank offers a consolidation loan where they pay off all your credit card debt and you pay them back at a lower interest rate.

7. Acknowledge your progress: Give yourself incremental milestones and reward yourself with something fun. Keep the reward under $100... the emotional significance of reaching a milestone is far more important than the value of the reward. When choosing a reward put more emphasis on the meaning rather than it's monetary value.

8. The more items you can knock off your list the more money you will have to pay off the remaining debt. With each new milestone add more money to your savings account. As you eliminate debt you want to increase your savings and plan for your future (e.g. buying a home)

Following a system creates a foundation for better habits. Having a financial routine each month reinforces healthy financial behavior. Over time you will spend a lot less energy thinking (worrying) about debt. Instead, staying “disciplined” becomes a lot more automatic (effortless). It’s a liberating feeling.

If you have any questions or to discuss your future plans for purchasing a home please don't hesitate to contact The Linda & Ryan Lowe Team