Having bad credit isn’t the worst thing to have in the world but in many ways it can be very tough for those who have allowed themselves to be affected as such. Are those collection notes building up? The bill collectors will not stop harassing you after you get off of work or even on Sunday’s when your family is on your mind, well this type of stress of not knowing what to do or avoiding it is not going to make things get better. You can legally eliminate debt and those loved credit cards are going to go into hiding if you absolutely need them but really they should be cut up because it is time that your credit take a front seat. Paying off debt isn’t fun that is why I mentioned the credit cards because essentially all of your debt will have to treated as such. In order to restore your credit back to normal there will have to be sacrifices in the immediate short term such as; no more breakfast at McDonald’s in the morning, the latte from Starbucks or if things are really bad then possibly cutting the cable and internet, these are measures that can be taken immediately to help boost the debt to income ratio but can tremendously help with the long term affects.

Now your serious about legally eliminating debt now what? Complete a financial assessment of your financial situation such as writing down how much you actually make as an income then you write down just how much actually comes in the door that is classified as debt and be precise with both.

Make a list of your monthly expenses, such as rent, utilities, food and other necessities. Be realistic, don’t write down that you can feed your family on $200 a month if you really need $400 to do it. Also, don’t forget your car insurance, fuel and maintenance on your vehicles, especially if you drive or commute to work each day. Do not include your credit card bills in this list.

It is good that you have compiled a list of expenses but now you should make another list strictly for those credit cards and your best best is to put the highest overall interest rate first and list them in ascending order until you have your lowest overall interest rate credit card. With that list for each card make sure to put each card’s minimum payment due each month and the balance.

Now, that you have your data in front of you, you can create a plan to legally eliminate debt and get yourself back on track. Add up your monthly bills list and your credit card minimum payment list. Subtract that total from your monthly income. This is your disposable income and it will play a key role in helping you eliminate your debt.

Each and every month, pay all of those regular bills and make sure to pay the minimum payments on all of those credit cards for the exception of the highest interest rate credit card from the top of your credit card payment plan. That particular card is going to have a little more money put toward the overall balance and this is where you can dip into some of that disposable income. The thought is, if you apply more money to all the higher interest rate credit cards and completely pay as much toward your debt as possible then you will have debt free living in your sites very soon.

The goal with this is to pay each card off one at a time and when you do that more disposable income due to the lack of debt can go toward paying off the next credit card. This can be done by simply applying the money alloted to paying off the high interest rate credit card that is paid off and apply what you were paying to the next highest interest rate credit card. You want to continue this until there are no more credit cards to pay off and you can move toward paying off your mortgage or vehicle.

Continue in this manner until you have paid off all of your debt. If you are having trouble coming up with disposable income, you may have to let go of a few luxuries such as cable television or internet until you get you finances straight, but it will be worth it.

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