Recipes for Financial Fitness

Credit Crisis

How do I make a debt reduction plan?

1	Figure out how much money you owe.
2	Read your credit report again and make a list of how much money you owe. Add to the list any money you owe to businesses not on your credit report, such as doctor’s offices and hospitals. Then add money you owe to family and friends.

Use the Debt Summary & Debt Reduction Plan Worksheet as a guide through this section. >>

You'll also want to update your spending plan by using the Credit Improvement Spending Plan.

Figure out income and expense options.

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Have the Credit Improvement Spending Plan readily available; update all your sources of income.

• Figure out ways to increase your income:

•	Get a roommate
•	Take on a second job
•	Start a side business
•	Sell things you don't need or can do without

• Calculate your potential additonal income and add it to your Credit Improvement Spending Plan

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Update all current expenses on your spending plan.

• Figure out ways to reduce your expenses:

•	Get out your My "Small Stuff" Spending Diary; for a week, track how you spend money
•	Get out your My Spending Leaks Worksheet; compare items on this sheet with items on your Spending Diary
•	Identify spending leaks you can get eliminate, plug, etc.
•	Adjust your expenses
•	Eliminate any bills that you can

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Calculate potential reduced expenses and add it that information to your spending plan.

Soon you’ll contact your lenders and try to negotiate new monthly payments. Use the Credit Improvement Spending Plan to figure out payment amounts that fit your spending plan. This way, you can keep the big picture of your finances in front of you.

Source: Girl Get Your Credit Straight by Glinda Bridgforth and Your Credit Score by Liz Pulliam Weston, The Ohio State University Bulletin