10 Basic Steps

5 Review and reduce your debt with 10 basic steps
Review and Reduce Your Debt

Review Your Debt

The sooner you identify exactly how much debt you have, the sooner you can make a plan to pay it off. Use the calculations below to identify your debt and pay off as quickly as possible while avoiding expensive interest charges.

How Much Consumer Debt Can You Afford?

Yearly net income after taxes and deductions is $__________

Monthly net income is $__________ (yearly income / 12)

Amount of consumer debt per month that I should not exceed is
$__________ to $__________ (monthly income x 0.15; monthly income x 0.20)

Each month, I can afford to pay between $__________ and $__________ for my consumer debt.

10 Warning Signs of Too Much Debt

  • Spending 20 percent or more of your paycheck to pay off car loans, credit cards, or other debt.
  • Borrowing to pay off other debts.
  • Unaware of how much money you owe.
  • Making only minimum payments on each bill.
  • Missing payments, or paying bills late every month.
  • Creditors are calling you.
  • Being refused extended credit or additional credit.
  • Borrowing from retirement accounts or use credit cards to pay other monthly bills.
  • Writing postdated checks.
  • Taking an extra job to pay your bills.

Create a Plan to Reduce It

After assessing how much money you owe, you may learn that you're carrying too much consumer debt. Don't let this realization overwhelm and paralyze you. By combining financial planning with debt management techniques you can reduce your debt by implementing the following tactics:

  • Create a get-out-of-debt plan. Use this calculator to help you organize your plan.
  • Cut expenses. Try to identify a few things you could stop buying or buy less often.
  • Get a second Job. Try to increase income. Is it possible to get a second job or overtime?
  • Prioritize debts. Pay off the highest interest rate debts first and move funds to the next when paid off.
  • Shift higher-interest loans to a single lower-interest loan.
  • Stop running up new charges.
  • Keep only one or two major credit cards and consider having the limits lowered.
  • Stop credit card offers from arriving in your mail: Call 1-888-5OPT-OUT (1-888-567-8688,

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