It starts with not using your credit any more. Immediately followed by creating a working budget. Prioritize your needs (housing, food, transportation, debt…) and start paying more than the minimum to the highest interest rate loan. Once the highest interest loan is paid off, redirect what you were paying to the next highest rate loan.
For example, say your total monthly income is $5000, your required spending (housing, food, utilities, insurance, etc) might be $4500. The extra $500 goes to debt. Once you know how much you will be sending to the bank, try to split it between your paydays. Timing your payments with your paycheck will reduce your temptation to splurge when you see that large account balance.
I know lots of professionals recommend having a 3-6 month cash reserve for emergencies. The problem is, if you are struggling with debt you are already in an emergency. Having cash sitting in a bank account earning 0.2% interest while you have debt charging you 12% interest you will end up prolonging the problem.
WalletHub Answers is a free service that helps consumers access financial information. Information on WalletHub Answers is provided “as is” and should not be considered financial, legal or investment advice. WalletHub is not a financial advisor, law firm, “lawyer referral service,” or a substitute for a financial advisor, attorney, or law firm. You may want to hire a professional before making any decision. WalletHub does not endorse any particular contributors and cannot guarantee the quality or reliability of any information posted. The helpfulness of a financial advisor's answer is not indicative of future advisor performance.
WalletHub members have a wealth of knowledge to share, and we encourage everyone to do so while respecting our content guidelines
. This question was posted by a WalletHub user.
Please keep in mind that editorial and user-generated content on this page is not reviewed or otherwise endorsed by any financial institution. In addition, it is not a financial institution’s responsibility to ensure all posts and questions are answered.