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5 Tips For Recovering From Debt ASAP

1: Attack your debts by order of interest rate

When looking at your debts and considering how to get started tackling them your first idea might be to pay off the smallest debt you owe first - this is a mistake. The most effective way to remove debt is to pay off the fastest growing debts; or in other words the highest interest rates. These debts are often the largest in principal and can take significantly longer to repay when compared to smaller debts, but it's critical to address them first!

2: Never miss minimum payments

Absolutely critical to improving you financial health is to make sure you never miss your minimum payments - failing to do this means higher interest rates, increased fees and a reduction in credit score. So while continuing to target your highest interest rate debt, don't forget to pay the minimum payments on all your debts first, then put your remaining funds towards your target debt.

3: Create a budget and find extra funds

Creating a budget is an excellent way to find extra funds to apply towards your debts. Start by looking at where your money ultimately ends up going and consider cutting unnecessary expenses. Looking at your first budget might shock you and really give insight into your financial health.

Start by looking at your credit card or bank statements. To structure your expenses consider using the traditional paper budget or an Excel spreadsheet. There's also a variety of apps or online services you can consider to help budget your expenses. You'll want to categorize your expenses to make the document easier to digest while also applying spending limits to each one. Be sure to include your income, if your expenses are larger then your income it is time to consider cutting some items.

4: Transfer your balance

Looking for credit with less interest than you're currently paying is an excellent method to save money while paying down your debts. But always make sure you read the fine print in these situations, if you're not careful you might be subject to increased interest rates and fees after an introductory period.

If you're not able to keep up with your balances — and even the minimum payments — call the Consumer Credit Counseling Service. They provide free credit counseling and a debt management service for a 3% to 5% monthly fee not to exceed $50. Go to to find your local CCCS office.

5: Reward yourself for your victories

This one might seem counter-intuitive but it's important to make the process of recovering from your debt a positive by allowing yourself a celebration (within the scopes of your budget, of course) when you reach a personal achievement. This positive reinforcement helps encourage you while also giving you something to look forward to throughout the journey.