Five Steps For Building A Plan To Get Completely Out Of Debt

Before you can create a plan to get completely out of debt, you must have your debt under control. You must take all of the required payments every month without borrowing on your credit cards in order to draw up and execute a meaningful plan to get completely out of debt.

If you aren’t ready, consider selling some assets to reduce your debt to the point that you are in control. Then, you can perform the following five steps to build a plan to get completely free of debt!

1. Draw up a list of all of your debts, ranked in order of size—smallest first.

2. Tally up the total of all the required payments. Add about 1% of your monthly income to that number. That extra bit of money we’ll call your power payment.

3. Each month makes all of the required payments on your loans and then add the power payment to your smallest loan. With the benefit of your power payment, your smallest loan will be eliminated quickly, perhaps in less than one year.

4. One loan was reimbursed, add the amount that you originally had to pay on that loan to your monthly power payment. It’s even bigger and more powerful now!

5. Keep paying your bills every month, applying power payment to whichever loan is the smallest until it is given off completely. Then, add the original payments from the paid off loans to the power payment so that it keeps growing bigger and more vigorous until all your loans are given off.

Following this plan will allow most people to be completely debt free, including emancipated from a mortgage, within ten to fifteen years.

Over the years, as you follow this pattern, remembering not to get into any further debt, most people under fifty can expect to see their incomes grow modestly over time, allowing you to improve your lifestyle even while you are focused on eliminating debt. Folks over fifty tend to see slower increases in income but may be experiencing reductions in expenses as children leave the nest.
The sooner you are resolved to break debt, the better. If you believe that it is miserable going to have to devote so much of your income to debt payments now, imagine how liberating it will want to have no debt. What would you do here if your home and your cars were completely paid off and you owed no one anything?