Worrying about your debt won't make it go away, but for millions of Americans the stress from deepening debt is becoming a major pain in the neck - and back and head and stomach! But stressing about your debt won't make it go away.
You MUST make a Debt Payoff Plan!
With so many different debt elimination methods available these days, it can seem like a tough task getting started and following through with a plan that will actually get you out of debt.
The answer is simple. You just have to take one step at a time. In this post I’m going to cover a simple debt elimination plan that will have you on your way to getting debt free in no time at all!
Clean Up Your Budget
The first thing you need to do is clean up you budget or if you don’t have one get started now. A budget will help you get things in order and let you know how much money you are spending each and every month and how much you are saving.
What you are really looking for is how much money you actually have left over at the end of the month. Having an extra $100 set aside for your debt elimination plans is all you need to get started. If you don’t have any extra money left, you may have to eliminate some things from your budget, get a part time job to help out, or find a way to reduce your monthly minimum payments while still eliminating your debt. (such as Debt Consolidation or Debt Settlement: see below)
Get Your Debt Together
Next you need to get all of your debts in order. To do this grab all of your creditor statements. And put all of your debts in order, so pull out a blank sheet of paper and list all you debts from the lowest balance to the highest balance.
When you have this done your mortgage should be listed as the last debt to be paid off and something like a credit card should be the first thing you pay off. The reason for this is because I want you to see results quickly by paying of the debt with the lowest balance.
Eliminate The Debt
There are several ways of going about eliminating your debt. However, what you must stop doing is only paying the minimum payments. If you don't, you will end up paying back at least three times what you originally owed and will spend decades paying back the debt. Here are three of the best debt elimination options available to you:
- Debt Consolidation or Debt Manegment - In this program, your Debt Consolidation or Debt Management company will work with your creditors to reduce your interest rate, eliminate fees, and lower your monthly payment. Another plus to this type of program is that your payment will stay the same over the course of the program which will get you out of debt in just 3-5 years on average.
- Debt Snowball Method - This method basically involves listing your debts from smallest balance to highest and paying them off in that order. You will always make the minimum payment on each debt, but will also contribute any extra money you found in your budget to the smallest debt. Once that debt is gone, you use the money you were paying on it to pay in addition to the minimum payment on the next debt. If you can find a little extra in your budget, this is a great plan. You might also consider the "Debt Avalanche" which uses the same principle. However, instead of paying off the smallest balance first, you pay off the debt with the highest interest rate.
- Debt Settlement - This is a great plan for anyone who needs to drastically reduce their monthly payments or for someone who is already significantly behind on their payments. Your Debt Settlement company will negotiate with your creditors and settle your accounts for usually 50% of what you owe. (sometimes even less)
If your looking more info on creating your Debt Payoff Plan, one of our Debt Solutions Specialist would be happy to anwser any and all of your questions. Please feel free to email info@debtreliefnw.com or call us at 877-492-4109.
photo by: BLW Photography
