According to CNBC the average American has $90,460 in debt.  While that somehow may or may not make you feel better about your monthly rent payment, on a whole, that’s a fairly overwhelming number to think about.  

If you are one of the millions of American’s that find yourself in debt, the first steps to moving forward can seem confusing and far-fetched, but it doesn’t have to be.  Here is my 7 step plan to get you back on the road to financial success and freedom from expensive debt.

Organization leads to success and when it comes to your finances, it is no different.  Put your bills in a pile and sort them, with your largest balances first.  Create a master list of each one and list the minimum monthly payment and interest rate. 

If you have bills with small balances; apply extra money to pay them off quicker while continuing to pay minimum payments on the cards with larger balances.  However, debt with the highest interest rate should be your highest priority to pay off.  Those debts are your most expensive and costing you the most money.  

When you pay off a debt, contact the company and immediately close out your account.  Get rid of credit cards so you aren’t tempted to use it again.  When you call to close out account, that is a victory.  Don’t be talked into keeping it open.  Go into your communication with a clear goal of financially moving forward and stick to your game plan. 

You likely know your weight, your height, your salary…your credit score is an important piece of information that you should be equally familiar with.  A credit report is a compilation of your bill-paying history.  Make sure you review it thoroughly as there might be errors on it that you need to address that could be impacting your financial security.  If you find errors, you will need to engage in disputing them to have your credit report corrected. 

A budget is going to be critical to ensure you are moving forward in a positive direction.  Identify monthly expenses to include your rent groceries.  Once these are compiled, add your debt repayment into your budget.  Your budget should account for all money coming in and going out.  Once you have a final budget, commit to it.  Use a debit card instead of your credit card.  Ensure you keep up with all of your receipts so you can record them against your monthly budget and hold yourself accountable for staying on track.

It’s easy to get overwhelmed in your finances.  Don’t feel intimidated to reach out and talk to a competent financial advisor.  I personally recommend the Moneywise coaches, which blend biblical wisdom and financial expertise to  provide practical answers to your financial needs but undoubtedly your bank or financial institution of choice will have a variety of resources.

Debt typically comes much easier than it goes.  Digging yourself out of a financial hole will likely take some time and commitment.  Don’t loose focus of your goal or be defeated…YOU CAN DO THIS!  Set realistic long-term and short-term goals to pay off your debt.  You will gain confidence as those milestones are met. 

Remember, you are planning for YOUR financial success.  Don’t be distracted by the financial habits of the people you surround yourself with.  In a nation where the average debt of Americans is at record highs, you’re not aiming to be “average”.