Debt can cause much stress in your life. Not being able to control your debt or not having a plan to get out of debt can play havoc with your overall financial management picture. As such, if you have a lot of debt, you need to enact a play of attack to tackle your debt and get it under control. If, however, you do not have a lot of debt but you plan on taking a big loan in the near future, you need to have a repayment plan in place.
There is nothing complex about a debt plan. Yet, the biggest problem people seem to have is coming up with the plan itself. People tend to over-complicate or look for loopholes that are not there. If you keep it simple and stay dedicated to your plan, you could be debt free in a short period of time.
*Stop Accumulating Debt:
No debt plan, not matter how detailed or creative, will work if you continue to accumulate debt. Paying off part of your credit card only to charge the same or greater amount at a later time, will prevent you from every getting out of debt. As such, the first and most important step is to stop accumulating debt.
This means that you need to stop using your credit cards, stop taking payday loans, and stop taking any kind of loan. If you stop accumulating debt, you will notice that your debt plan will work faster and thus, cost you less money.
*Be Realistic:
Although you may want to be debt free in a couple of months, depending on the size of your debt, this may not be possible. This does not mean that you should give up on your plan. Paying off debt takes time. Absent you filing for bankruptcy or winning the lottery, it may take you one year, two years, or even ten years to completely repay your debt. As such, stay patient and stick with your plan if you want to be debt free.
Do not put an unrealistic plan together. For example, do not create a plan where 90% of your take-home monthly income is dedicated to paying off debt. You cannot sacrifice other obligations in order to pay debt. As such, be realistic about your monetary commitment and your time line for paying your debt if you want to achieve success.
*Pay The Highest Interest Debt First:
The higher the interest rate, the more money you will pay over the life of the debt. As such, dedicate the largest portion of your debt repayment money to the highest interest debt first. By doing so, you will reduce the time and money it takes for you to become debt free.
Remember, if you want to get out of debt, you have to develop a debt repayment plan. You must stop accumulating debt if you want your plan to work. Be realistic about the amount of money you can dedicate to repaying debt and about your time line to do so. Finally, make sure to pay the highest interest debt first.