Wouldn’t it be great to have an eraser that could wipe away all of your debts?
Maybe your game plan is hoping to win the lottery or some rich relative will give you some cash. Well it’s time to take responsibility for your financial future! With a game plan, you can become debt free. And you probably in less time then you think!
Step 1: Start with a plan
To know where you’re going, you need to know where you are today. Make a list of all of your debt including the balance and minimum payments. Create a spreadsheet where you write down the balances of all of your debts and the minimum payment amount.
Step 2: Create a spreadsheet
Make a separate column for each of your debts; listing the smallest debt on the left to the largest debt on the right. For example, you have debts for medical for $400, a visa for $900, a car loan with a balance of $5,000 and a home loan balance of $100,000.
Step 3: Fill in your payment schedule
Write the minimum payment amount under each of the debt balances.
– Medical expense = $100
– Visa minimum payment = $50
– Car payment = $300
– House payment = $1,200
In this case you would be paying out $1,650 per month to cover the minimum payments.
Step 4: Payment plan
Maintain the same monthly payment amount when you have paid off the lowest balance debt. So in he example above, you would pay off the medical expense within 4 month. Then apply that $100 to the next lowest debt, the visa, increasing the payment there to $150. Once the visa is paid off, take the $150 and apply to your car payment, accelerating the payoff of the car. And finally when the car is paid off you begin applying the full $1,650 towards paying of the house.
Step 5: Accelerate the payment plan
To get out of debt faster, up your monthly payment amount by $100, $200 or more using the same principle in Step 4 to payoff the smallest debt first, then rolling the amount over to the debt with the next smallest balance. You may be amazed at how quickly you can get out of debt with this simple plan.
When will you be debt free?