-
Tommy accumulates $10,000 in debt
-
Period: to
Paying off debt
-
Tommy seeks to get rid of his debt
Tommy can go to a debt relief service. They help give advice and planning for paying off debt. He can also might be able to declare bankruptcy. That means he could receive a discharge not having to pay all of his debt. Bankruptcy is not the best because you'll have that record for the rest of your life (4.2 p8-9) -
Budget
To pay off debt you need to see how much money you take in vs how much you spend. Tommy makes a chart and puts things into three columns: income, fixed expenses, and other expenses (4.2 p8). -
Chipping away at debt
Tommy takes his total income then subtracts fixed expenses. Of the remaining amount, Tommy selects an amount to set aside to pay his debt. How long it takes Rommy to pay his debt depends on how much money he makes, how much his fixed expenses are, and how much of the rest of the money he sets aside (4.2 p8).