Money Management

Pay Off Debt
It's Time to and Here is How You Do It

It's time to pay off debt. You have stopped fooling yourself and realize it's time to start paying off debt? You are ready to tackle it, and put a plan in place.

But how do you pay down debt? Below are some ideas and links where you will find some great tips for paying off your debt.

Create a Good Debt Repayment Plan

The first thing you need when paying off debt is a plan. You then need to commit to the plan, and follow it every day until your debt has been paid off. If you are unsure how to create a debt repayment plan, then check out our Get out of Debt Plan.

Calculate Your Expenses Every Month

The amount you can pay each month when paying debt down, depends on how much you have left over each month from your income, after paying your expenses. If your income is less then your expenses each month then you are accumulating debt just to survive. This doesn't work, and you may need to tighten your belt just a bit, or maybe a lot.

To determine what you spend each month, and how much you have left over you must organize your finances, and do up a simple budget. This will show you how much you have left each month to pay off your debt. We love YNAB as a budgeting program.

If you don't have any money left for paying off debt, then you must look at your spending. You can't move forward if you can't pay off your debt. You have to reduce your spending, or increase your income otherwise you may be looking at bankruptcy (as an ABSOLUTE last resort)!

Reduce Your Spending

What can you do without while you are paying debt down? Here are some ideas:

Brown bag your lunch
Rent or borrow the latest DVD's or books instead of buying them
Reduce your cable and entertainment spending - do you really need all those extra channels?
Buy gently used items instead of new (some real bargains can be found if you do your research)
Decrease the number of times you dine out each month
Quit Smoking - save over $2000 a year and save your health!

Look for opportunities like these to reduce your spending - check out our money saving ideas for more ideas.

Don't Accumulate Any NEW Debt

When you are paying off debt, there is no point in accumulating new debt. You will just end up in a never ending circle! So STOP creating new debt! Do everything you can to avoid creating new Debt! Commit to this above everything else.

Learn Zero Based Budgeting to ensure that you aren't creating anymore debt. Only use cash. Try an Envelope budgeting System. or YNAB budgeting software

Paying Off Debt in Chunks

Best way to get out of debt is paying off debt in chunks . Check out some ways to earn some money to pay off your debt earlier than you planned to.