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BBB offers tips to become debt free

Did you start the new year with a mountain of debt?

Don’t feel bad. Millions of people are in the same boat. But no matter how much is owed, changes can be made today to get out of debt and build a stronger financial future.

Better Business Bureau and ClearPoint Credit Counseling Solutions are encouraging consumers to be “calculated budgeters” in their efforts to get out of debt. Here are five tips to help you be more calculated in budgeting and debt reduction in the new year:

1. Set up a household budget to guide spending patterns

Adjust expenses to find extra money to pay down credit card and other revolving debt – even $50 a month will help.

2. Choose a method

Debt management experts advise either paying off higher-interest balances first (this is the ladder method of debt repayment) or paying off smaller balances first (called the snowball method, because you build momentum). Either way, you’ll be moving in the right direction.

3. Ask for lower rates

Most credit card companies will lower interest rates when asked, especially if you mention a “hardship plan.” Lower rates mean your payments go more toward principal instead of interest.

4. Send extra payments

Make at least the minimum payment each month on every account, but send that extra amount to the chosen payoff account. As soon as that debt is paid off, put its payment and the extra toward the next account on your target list.

5. Stick to the plan

It can be tempting to use credit cards again once the balances are lowered, but that will only make it harder to get out of debt, and the process may take much longer. Resist the temptation and keep your eyes on your long-term goal.

For more tips, visit www.bbb.org.