Cash The Checks Personal Finance Blog

Creating A Plan To Pay Off Your Debt

It’s easy to get yourself into financial problems, but getting out of debt is not easy. It can take you mere weeks to rack up thousands of dollars in credit card debt. But for sure it will take much longer to wipe out your debt. But you will never wipe out with your debt without a solid plan in place. You need a long term plan and the determination and patience to see it through.

Here is a 6 step guide on how you can help pay off your debts.

Write down all of your debts

Use your credit report as well as your statements to see what you owe. Write down who you owe, what kind of debt it is and the amount.

Create a budget

In order to tackle your debt, you need to set money aside to pay it down. But first, you’ll need to see where your money is going to see how much you can contribute towards your debt.

Be patient

While it may have taken 1 year to accumulate this debt, it can take you many more years to completely wipe it out. Don’t be discouraged. This plan you’re creating just proves that there is light at the end of the tunnel.

Decide what to pay first

You’ll want to tackle your worst debts first. Try paying off those with the highest interest rate first. If you have some smaller debts, get rid of those as soon as you can too. This can have a psychological benefit and, if listed on your credit report, will have its status changed to paid which will raise your credit score.

Don’t forget about your savings

While the goal is to pay off your debt, you should not ignore your savings account. In fact, the lack of having any savings is likely the reason you’re in debt. Unless you keep your savings account funded you’ll just continue to rely on credit.

Sell your stuff

We all have a lot of extra junk we don’t need. Now is the time to get rid of it. Have a yard sale. You can sell gold, sell diamonds and other jewelry. Put up your old electronics on eBay. You will declutter your home and make some money in the process. Use this money to help pay down your debt.

If you follow the six steps I’ve outlined above, you’ll be well on your way to getting rid of your outstanding debt once and for all.

Comments

Dr. Jason Cabler (@DrCabler) on 10/05/11

Great job! These steps are very simple. They take some time and patience to implement but work like a charm.

I think the most important thing to ensure success is to have at least $1,000 in savings in place as an emergency fund to cover something unexpected so your get out of debt plan will not get derailed.

I teach participants in my “Celebrating Financial Freedom” course that when you commit to getting out of debt, the steps aren’t extremely difficult, but you just have to stay committed. If you stay committed, you will succeed.

“When you help me with money, you help the world prosper”- J.M. Dumont


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