What is the best debt elimination plan?
- A new year
- Too much unsecured, credit card debt
- Time for a plan
The holidays are almost over and for most people, they find themselves with more credit card or other unsecured debt than they can handle.
DEBT ELIMINATION PLAN:
Know exactly where you stand, financially.
The first step in any debt elimination plan is to take the time to complete a thorough BASIC HOUSEHOLD BUDGET.
Be honest with yourself!
If you are spending $100/month on stuff like:
- Fast food
- Video poker
- other non-essential stuff
Maybe it is time to get tough on yourself and make some cuts! If you are serious about eliminating debt, this is critical!
Attack the Credit Cards!
Are you serious about you Debt Elimination Plan?
Then it's time to destroy those cards! Keeping those cards available will only lead to more debt.
The credit card industry preys on people by offering:
- Easy credit
- Low monthly payments
- Earn "points" to be used to buy more stuff!
What they don't tell you is that if you only make the minimum payments due on the cards, you will most likely end up paying back 3-4 times the original amount you borrowed and may take you 10-15 years to do so!
Each case will be different (that's why it is so important for you to complete the BASIC BUDGET WORKSHEET.
Let's say you have $25,000 of total credit card debt. With the average credit card allowing you to only pay 2% of the balance, your total minimum payment would be $500/month.
Let's say you have $650 at the end of each month:
Although there are many "Snowball Plan Calculators" available online, the concept is simple:
Apply the extra $150 to the lowest balance while keeping up with the other card's minimum balances due.
Once this card is paid off (you'll be surprised to see how fast), then take the extra $150 PLUS the normal minimum balance you were paying on that card you just paid off PLUS the normal minimum payment on card #2 and apply to card #2.
If you keep this going (always a total of $650/month), you will get these cards paid off in an average of 48 months or so and save thousand of dollars in interest and fees!
But, what if you don't have any extra money at the end of the month? In fact, you can barely make the minimum payments now!
If you are serious about a Debt Elimination Plan, you will find a way to be DEBT FREE!