Paying down any debt takes planning and determination. Procrastination will only make it harder, so it is best to start today. The following information will help you get organized and focused on achieving your goal. It will show you the best way to pay down debt.
Cut out any expenses possible.
Keep track of what you are spending every month, considering quarterly and semi-annual expenses as well. Determine what items you can eliminate temporarily until you reach your goal of paying down debt. Cancel these items to increase cash flow.
Choose the debt you want to pay down.
Make a list of all debts, including amount owed, interest rate and amount of payment due each period. You can make your choice by several ways. You may want to start with the debt that will take the shortest time to pay. It will give you confidence and a feeling of accomplishment sooner.
You may want to start paying off the debt with the highest payment due, or you may want to start with the debt with the highest interest rate. You will be able to make up your mind as you examine your list.
Decide how much you want to pay each period.
The amount you allocate toward debt payment must be significantly more than the minimum payment. The more you pay toward the debt, the faster it will be paid off. You may want to set a time period until payoff. By dividing the balance due by the number of months you want it to be paid off will give you an idea of how long it will take. Interest accumulation will extend the time you estimate, so you should allow for this factor.
You may set the amount by what you can afford. If you are paying off a credit card, you will need to quit using it. If you do use your charge card, then pay the pre-determined amount plus all charges added during the bill period.
Stick to the plan with determination, keeping the goal in mind.
It will not be easy to stick to your plan, your emotions may get in the way. You may feel like you are giving up some things that you miss. Keep in mind this is only a temporary arrangement. You will gain a great sense of freedom when the debt is paid. Now is a good time to pour yourself into a hobby or interest. Use the supplies and resources you have on hand. Browse through your home, you may find some things you have forgotten that will be of interest.
You will experience satisfaction when you are successful at paying down the debt. You can add some of the things you had eliminated if you discover you have really missed them. You will probably find that you are more productive without the distraction of excess items. Enjoy your new freedom. You will agree that it was an excellent cause to pursue.