With so many different methods of how to eliminate debt these days it can seem like a tough task getting started and following through with a plan that will actually get you out of debt.
In this article I’m going to cover a simple debt elimination plan that will have you on your way to getting debt free in no time at all, and the best part about this option to eliminate debt plan is that it’s all free.
Clean Up Your Budget
The first thing you need to do is clean up you budget or if you don’t have one get started now. A budget will help you get things in order and let you know how much money you are spending each and every month and how much you are saving.
What you are really looking for is how much money you actually have left over at the end of the month. Having an extra $100 set aside for your debt elimination plans is all you need to get started. Although if you don’t have an extra $100 you may have to eliminate some things from your budget or even get a part time job to help out.
Finally, if you are looking for a good budget worksheet check out this form right here, it’s the one I use and it’s free.
Get Your Debt Together
Next you need to get all of your debts in order. To do this grab all of your debts now. The first thing we need to do is put all of your debts in order, so pull out a blank sheet of paper and list all you debts from the lowest balance to the highest balance.
When you have this done your mortgage should be listed as the last debt to be paid off and something like a credit card should be the first thing you pay off. The reason for this is because I want you to see results quickly by paying of the debt with the lowest balance.
Eliminate The Debt
Now before we start eliminating the debt I should mention one more thing. Pay just the minimum payments on all of your debts, including your credit cards. The reason for this is because we want to take all of the available cash we have plus the hundred dollars we set aside in the beginning of this article and start applying it to the first debt with the lowest balance on the list.
If the first debt is only a couple hundred bucks you should have it paid off in two or three months. Once that debt is paid in full move on to the next debt except you will want to apply all the extra money you were paying on the first debt to the second debt now plus the minimum payment you were making on that debt originally.
Keep doing this until all of your debts are paid in full. This plan make take a little time to get started but once your rolling you should have a lot of your debt paid off in three years or less.
Final Thoughts…
One final thought I should add when setting up your plan is that once you pay off a debt it is very important that you don’t accumulate anymore debt. For example if you have credit card paid in full don’t use it anymore. If this is big problem for you, you may have to cut up the card completely.
Also once you are done with the plan you should take all of the money you were paying towards your debt and build up a 6 month emergency fund. This will prevent you from slipping back into debt and living paycheck to paycheck again.
Lastly, if your looking more info on the debt elimination plan I use check out my Debt Plans section.
Chris