It is easier to get into debt than out of debt but there is a way to climb out of the debt hole fast.
Step 1: You have to squeeze out a relatively small monthly saving from your budget which will be applied towards making extra payments to eliminate your debt. You can find this saving by cutting something out of your “wants” oriented spending. For this purpose lets us assume that from you are able to save $150 monthly and apply it to fast track your debt elimination. This fast track 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 fast track savings for this debt elimination goal, following these steps will still work. It may just take a little longer time.
Step 2: Stop accumulating bad debt. Whatever you purchase through credit cards have to 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. List the debts starting with the debt with the lowest amount first (#1) and the debt with the highest amount last.
Step 4: Next to each debt listed make three columns to capture the following information:
a. Amount Owed (Current Balance)
b. Minimum Monthly Payment
c. The Annual Interest Rate
Step 5: Every month, pay the minimum amount on all the debts you have listed. For the first (#1) debt, every month, you should pay the minimum amount plus the Fast Track amount you saved in step 1 until that debt is paid.
Step 6: When the debt ranked #1 is paid off, you transfer the total amount you were paying towards debt #1 and apply it towards debt #2, in addition to the minimum amount that you were originally paying for debt #2. Now debt #2 is being paid off at a faster rate.
Step 7: Every time you pay off a debt, transfer the total amount you were paying for that debt and apply it towards the next debt in your ranking.
– Debts that would have taken 15 years to pay off can be paid off in 3 years.
– Even a 30 year mortgage can be paid off in less than 15 years
You can use a pen and paper to perform these steps and calculate when all your debts will be paid off. however it is a lot easier if you use a template.
How quickly will your debts be eliminated if you save and apply a monthly fast track amount of $50, $100, $150, $300, etc? The template is able to provide fast answers and help you make the best decision quickly.
You can get the template I created and fine tuned over the years. It is simple, accurate and fast. The template shows you when each debt will be paid off and when you will be completely debt free. Click here to get it
