Planning is not a long winded process. It is not going to take up too much of your time and the small amount that it does require is far from wasted. Planning to get rid of your debt is one of the most crucial things you can ever do in your life. Here’s how:
1. Basics – Write down all your financial statements, debts, balances, income and more. This may be a briefly described step compared to the following but it’s important because your plan is going to center around this information.
2. Your Debt Reduction Program – Make a rough chart or list with these topics in the same order: ‘Monthly income after taxes’, ‘Amount of debt to pay’, ‘My monthly expenditure’, ‘Remainder’. After you fill in these spaces based on the information you collected during the first step, start by subtracting your debt-amount and monthly expenses from your income (after taxes). Highlight the debts that have high interest rates and/or high balance and use the remaining amount to pay it off as and when you get the cash together every month based on this chart/program/plan. Make sure you focus only that debt until it’s file is closed. Move on to the next highest and so on and so forth. As strange as it may seem, this idea has proven to be the fastest way to get rid of debt.
3. The Increase Chart – Get another small chart going with months for headings in various slots. Now increase the amount you’re paying to close your biggest debts and perform this increase every month. Make small and reasonable increments and keep track of it using this chart. It’s essential to be perfect when it comes to numbers and these charts and the program above will help you stay aware of what’s going where and when. Do not underestimate the power of these ideas because after several months have gone and you’re well into your payment completions you will be glad you made these chart systems to help you stay ahead.
4. The Talk – Never be ashamed when it comes to money. You took and now you’re going to give back, it’s quite black and white when you think about it. This entire plan is designed to help you alleviate debt not accrue it, so sacrifice where you can (whether it’s eating out, cable television, unwanted gift purchases and so on) and do not have more credit card charges added to your account;keep them under 35% of your credit limit. This last point or idea in your personal debt reduction program is for you to call or meet your debtors and lenders and ask them nicely if they can improve your payment terms. There’s no guarantee this will work but there is a good chance that they will lower your interest rates or they might chat with their customer service department to get you a reduced debt settlement. Also, shift your credit card debts to new accounts that have lower interest rates. Imagine what 6-12 months with 0% introductory rates can do for you.