Freedom from debt is possible – with a plan

Constructing a debt repayment plan is the single strongest step to take to achieve freedom from debt, according to Hamm.

In my opinion, if youre in a financial hole, constructing a debt repayment plan is the single strongest step you can take. It creates a clear picture of your debt situation, tells you the most efficient way of paying them off, offers you clear steps on what to do next, and can also be a useful tool when looking for additional help.

The Simple Dollar is a blog for those of us who need both cents and sense: people fighting debt and bad spending habits while building a financially secure future and still affording a latte or two. Our busy lives are crazy enough without having to compare five hundred mutual funds we just want simple ways to manage our finances and save a little money.

Constructing Your Plan Its pretty easy to put such a plan together. Put aside an hour and follow these steps.

First, collect all of your debt information in one place. Youre going to want your current balances, your interest rates, and your minimum monthly payments for each of these debts.

Then, simply make a list of those debts, ordering them by interest rate. Make four columns debt name, balance, interest rate, and minimum payment. Put the debt with the highest interest rate at the top of the list and add others below that in order of interest rate, with the higher ones near the top.

Once you have that, total up your minimum payments. Add them up to see how much youre putting toward your debts each month.

Then, add some amount to that total minimum payment. It needs to be an amount you can consistently afford. Maybe its only $25 a month. Maybe its $500. Were all in different situations with different financial requirements.

That new amount, the total minimum payment plus the additional amount, is going to be how much you put toward debt each month until these debts are all gone.

Using Your Plan

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Freedom from debt is possible – with a plan