Getting Out of Debt:
Steps for Creating Your "Getting Out of Debt" Plan
Continued from Page 1 of
Getting Out
of Debt Plan
As mentioned on page 1, Getting out of debt isn't hard to do when you have a step by step plan
and you follow it as it was designed.
It's important to understand how important it is to make sure that your plan is
SMART,
let's look at steps 5 through 9 of your get me out
of debt plan.
Remember as you are creating your "get me out of debt" plan:
- How important it is that the plan be easy to follow,
- Look for
ways to reduce
the principal of your debt
- You are in control of how well the plan works for you.
Steps 5 Through 9 for Creating Your "Getting Out of Debt" Plan
- Pay the Minimum Payment of each Debt each Month
You must pay the minimum payment as calculated by the credit card company.
If the debt is not for a credit card and you have negotiated a repayment
plan then include the negotiated monthly payment. You don't want to increase
your debt by adding late payment charges to it and you want to show the
credit card companies that you are honoring your contract with them. List
out all minimum payments. Any amount that is left over is used to pay off
the rest of the debt.
- Start with the Lowest Balance Card
Once your secured debts in arrears have been paid off, debts that your wages can be garnished for,
and any necessary expenses are paid off, take the extra amount of money
you
have dedicated to paying off your debt and pay off the lowest balance first.
Put the maximum you can to the lowest debt, finish paying it off and then
move to the next debt. Paying off the lowest balance will give you a sense
of accomplishment and something to celebrate.
- Create a Schedule of How Long it will Take to
Pay off Debt
Calculate how long it will take to pay down your debt. Write on the top of
your plan "WHY" you are paying off your debt. (see our Things to Remember
when
Reducing your Debt) Remember that each month you are charged interest
and it is compounding. The minimum payment doesn't usually cover the
interest charged to your account. Create a schedule and determine how long
it will be. Will it be 3 years? 5 years? 1 year? How long it will take you
to pay off the debt will greatly depend on how many extra payments you can
make against your card. Check out our ideas on
paying off
debt quickly.
- Continue Until All of Your Debt is Paid off
Continue working your getting out of debt plan by paying the minimum payment on your outstanding balances
and pay the extra to the lowest balance as per your schedule you worked out
in Step 7. Each milestone you hit - Celebrate! It is important both to your
motivation and sense of accomplishment to acknowledge when you hit your
milestones!
- Once Your Debt is Paid Off
What do you do when you have accomplished your "getting out of debt plan"?
You continue on with your
overall game plan for your money. Most importantly though, is to take
that extra money each month that you are not paying your debts off with, and
start an emergency fund to make sure you don't go back into debt. Check out
our spending plan's (coming soon) to see how to create a plan for your money
that allows you to have whatever it is you want, and not go into debt to get
it!
Check out this
CNN Article about 10 families that Had enough with Debt and made a getting
out of debt plan for themselves!
Go back to page 1 of Creating your "Getting
Out of Debt Plan"
Debt Free Living
See how it is possible to live debt free and find the tools you need!
Avoid Debt
Debt Free Living - Debt Avoidance is the first step to living debt free!
Debt is Dumb
See how debt is dumb and how it causes stress and problems in your life!
Reducing
your Debt
There are many things to remember when reducing your debt
Create
your Get Me Out of Debt Plan
Learn basic structure to create your plan to get out of debt
once and for all!
Over all Game Plan
Getting out of debt will most likely be part of your overall money management plan.
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