Cents and Sensibility

Killing Debt One Bill at a Time

Credit: Thinkstock

How do you get rid of debt and build wealth? Easy. Focus on one bill at a time. While getting out of the red isn’t fast,  you will be amazed at how quickly you start to eliminate debt if you follow these five tips.

1. Determine your expenses and income.

Use your check stub to calculate how much you bring home in earnings, per month. Write that number down on one side of a piece of paper.

2. Next, add all of your monthly bills, including estimates from eating out and entertainment.

One easy way to track your expenses is to save all of your receipts for one month and add the amount used from receipts, bills paid, and cash used to come up with an estimated total of your monthly expenses. Write that number on the other side of the paper.

3. Now, it’s time for some math. 

If your expenses outweigh your monthly income, you are in trouble and should figure out how to spend less, save more, and increase your income to overcome the shortfall in your finances. Consider the number of times you eat out or get coffee every week, clothes you buy, or your entertainment expenses.

4.  Get to cutting!

If the shortfall is large, you should consider downsizing your home, moving somewhere with lower rent, selling your vehicle; or cutting back on your lifestyle expenditures. If your income is larger than your monthly expenses, consider paying off debt, saving money, and making investments.

5. Pick the biggest bill.

After you identify your bills versus your expenses, consider which bill to focus on first. Keep in mind debt can grow. One example of growing debt is a credit card with interest rates.  The immediate payoff vs. paying the monthly minimum amount due on a credit card can be a difference in you dishing out hundreds of dollars.  If you have five credit cards, identify which credit card has the highest interest rate. Put as much money toward the credit card with the highest interest rate and pay the minimum payment on the other four credit cards. Once the highest rate credit card is paid off, continue to implement the same “snowball method” with the remaining credit cards. Once the credit cards are paid off, identify the next bill with the highest interest rate that will be your focus (e.g. car note, student loans, or medical bills).

Bottom line, staying focused (one bill at a time) on the highest interest rate bill will allow you to save big bucks in the long run.

About Dr. Karen Ratliff

Credit: Dr. Karen Ratliff

Dr. Ratliff is a certified life coach and professional educator, assisting many people in accomplishing financial, career, and educational goals.  She is also the author of “Tightening Your Bootstraps: 104 Tips to Kick Your Debt to the Curb Now.” Keep up with her budgetary advice via Twitter @drkarenratliff and her website at