Eliminate Your Debts

It is easier to get into debt than out of debt but there are ways to climb out of the financial hole.

Step 1: You have to squeeze out a monthly saving from your budget towards debt payment- you can find this saving by cutting something out of your “wants” oriented spending. For this purpose lets us assume that from your savings, you are able to apply $150 monthly to accelerate your debt elimination. This acceleration amount of $150 is over and above the minimum monthly payments you currently make on your debts.

Note that even if you don't have any savings for this debt elimination goal, following these steps will still work.  It may just take a few more years.

Step 2: Stop accumulating bad debt- whatever you purchase through credit cards must be paid of in full by the end of the month

Step 3: Make a list of your consumer debt, all school loans, credit cards, car loans, home improvement loans, personal loans, and even your mortgage

Step 4: Next to each item listed make three columns that detail
a. Amount Owed (Current Balance)
b. Minimum Monthly Payment
c. Numbers of Months To Pay Off

Then divide the amount owed by the minimum payment to arrive at the number of months for the debt to be paid off

Step 5: Based on the number of months it will take you to pay off the debt, rank them by number from least amount of months to the most. So for the least amount of months to pay off, write #1 on it and so forth.

Step 6: Pay the minimum amount all the debt you have listed except for the one ranked #1, that debt you should pay the minimum and an extra $100-150 every month until that debt is paid

Step 7: The following month, you pay debt the amount you were paying for debt #1 towards debt #2, plus the minimum amount that you were paying originally for debt #2.

You can use a pen and paper to perform these steps, however if you need a template, you can use the one I created and fine tuned over the years. Click here to get it

Obi Keeps It Simple & Straight