How to Make a Debt Payoff Plan and Stick to It
How to make a debt payoff plan – and stick to it
Taking control of your finances means setting up a clear plan to handle your debt. The most important part of any plan: laying out a sound strategy you can put into practice.
Here are some tips.
1Make a list
Once you get all the numbers in front of you, it will be much easier to visualize the way forward. List out:
- CURRENT BALANCES
- MINIMUM PAYMENTS
- TYPES OF DEBT
(CREDIT CARDS, STORE CARDS, AUTO LOANS, MORTGAGE LOANS, ETC.)
- INTEREST RATES
- DUE DATES
2Choose which debt to tackle first
There are a couple of methods to consider.
- You might want to prioritize repaying the debt with the highest interest rate, which may save you the most money overall.
- You might want the feeling of accomplishment from paying off the lowest balance first.
One tip to keep in mind:
A balance transfer card may help you save on interest charges when you transfer high rate balances. Balance transfer offers may include low promotional interest rates or even temporary periods of no-interest on the balance transfer amount, allowing consumers who qualify to roll over debt from high-interest credit cards.
3Start paying as much of the debt you've decided to focus on first
At the same time, make sure you meet payment obligations on other debts.
4When one debt is repaid, move on to the next debt on your list
After you successfully pay off one debt, add that payment amount to the next debt on your list.
5Stay on track and stay motivated
Set up automatic payment reminders and make sure to track your progress.
Remember, success is worth celebrating!