How To Set Up A Debt Payment Plan Take Control Of Credit Card Debt & Payoff Debts Faster!
How to set up a debt payment plan in 6 easy steps. When you've had enough of debt eating up your resources and ruining your life, it's time to set up a debt elimination plan.
How quickly you can get rid of your burden would depend on how patient you can be and how committed you are. A little sacrifice also helps.
As you get ready to prepare your debt repayment program, keep in mind that the secret to successful debt elimination is to pay above the minimum monthly due.
Meeting the minimum requirement from month to month means you're only taking care of the interest; the debt's principal stays the same. By paying an extra amount each month, you chip away at your debts until you're finally free.
The second thing to remember as you prepare your debt payment plan is to prioritize. Put your extra resources into paying the more pressing obligation first while allotting only the minimum amount on the smaller ones. By taking care of your debts one at a time, you'll quickly pay up what you owe and be debt free for life.
Here's how to prepare a debt payment plan that works:
Step 1. Gather the most recent statements of your mortgages, loans, and credit cards and make a list of everything that you owe. Write down the outstanding balance, minimum payment, and interest rate under each.
Step 2. Arrange your debts according to their degree of urgency, or the order in which you plan to pay them. Debt elimination consultants vary on how to rank debts for repayment.
Some advise listing them from the biggest to the smallest; others recommend concentrating first on the smaller ones before tackling the larger amounts. Choose the sequence you're comfortable with and stick to it.
Step 3. Having done your order of battle, so to speak, you should determine the amount that you need to set aside each month to pay off your debts.
To do this, prepare a monthly get out of debt budget, deducting all the expenses from your income. See how you can trim your budget to generate savings which you can then add to your monthly payments.
If your budget is tight, you have no choice but to look for part-time employment to augment your income. Also list down all the bonuses, rebates, and cash gifts that you expect to receive and put them all into your monthly debt elimination payments.
Step 4. With your priority list and envelope budgeting system in place, start paying the biggest (or smallest) item, making sure to pay higher than the minimum monthly due. All the rest should make do with minimum monthly payments.
Continue this sequence until you fully pay your number one priority. This is known as the debt snowball method as you complete one, move on to the succeeding item on your list, crossing out each debt as you go along.
Step 5. When you have paid up everything, save the extra funds that you now have. Deposit them in a bank where they can earn interest, or invest them where they will grow.
Step 6. Finally successful in implementing your debt payment plan, you should avoid getting into a new round of debts and reliving the painful process of repaying them all over again. Cancel your credit cards or cut them up and throw them away. Refuse any new offers of credit and you will be debt free for life.
Return from Debt Payment Plan to Debt Elimination Programs!
Return from Debt Payment Plan to Debt Elimination Plans