Before you can conquer debt, you need to understand it. Learn how to gather and analyze your financial information to create a debt repayment plan.
Step 1: Gather Your Data
Retrieve your credit card statements and log into your accounts. Identify key details for each card:
Total balance: Your current debt amount.
Interest rate (APR): Determines your monthly interest charges.
Finance charge: The cost of carrying debt each month.
Step 2: Crunch the Numbers
Calculate your monthly interest payments for each card. Use this formula:
Interest Payment=(New Balance×APR)/12Interest Payment=(New Balance×APR)/12
For example, a card with $10,872 balance and 14% APR incurs an interest payment of $126.84 monthly.
Step 3: Total Your Debt
Sum up the balances of all your cards to find your total debt. Use this figure to plan your debt repayment strategy.
Step 4: Plan Your Payments
Determine a monthly payment goal to pay off your debt in 5 years. Divide your total debt by 5 to get the yearly payment, then divide by 12 for the monthly amount.
Take Action:
With your financial data in hand, you're ready to devise a debt payoff plan. Stay tuned for our next post, where we'll explore three effective strategies to tackle debt!
Ready to tackle your debt? Start by gathering your financial information. Stay tuned for expert tips to pay off debt and achieve financial freedom.
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