Making the decision to get out of debt is already a step in the right direction. You’ve set the tone towards planning a better financial future. Generating a repayment plan can keep you focused and will help to motivate you even before you start to notice real progress.
Besides, paying off more towards a singular debt at a time can significantly speed up the process and before you know it your debt will start disappearing before your eyes.
Have a look at these five steps for setting up a repayment plan.
5 Tips for Setting up a Repayment Plan and Getting Out of Debt Faster
Sponsored by Polk Partners
1. Draft a List of all Your Debts
Before creating a strategy, it’s useful to know exactly what you’re owing.
The list must entail your minimum monthly payment total, interest rates and the entire amount that you’re owing.
Make a list of personal loans, credit cards, mortgage and student loans (if applicable).
Also, include any monies that you owe to friends and family.
Try to save a small amount towards an emergency fund to avoid using your credit cards again.
2. Rank Your Debts
Decide which debts you’d like to pay off first, preferably those with the highest interest rates.
Some people pay off smaller debts first to start gaining momentum to pay off the bigger ones.
The decision is ultimately up to you, just remember to stick to your decision once you’ve begun.
3. Locate Money to Pay off Debt with the Help of Polk Partners
It can be incredibly useful to try and find extra ways of boosting your income to pay off the debts faster.
Maybe consider cutting back on certain areas like social activities to have extra money that can be allocated to certain debts. It helps to set up a strict budget and stick to it.
Using extra money from tax returns, bonuses or monetary gifts and applying it to paying off debt faster can also go a long way.
Some people look into financial offerings from institutions with once-off monthly fees and low-interest rates to help them with settling debt faster.
4. Focus on One Debt at a Time
Try to emphasize on paying off the debt that appears on the top of your list first. Allocate a larger amount towards this and only pay the minimum payable amounts on the other payments.
This way you’ll be paying more towards the principal balance and less on interest.
Once the first debt on the list is paid off, start moving towards the next and continue the process until all the debts are crossed off your list.
Once you’ve gained momentum, you’ll be amazed at how quick your debt starts disappearing.
5. Building up Savings
When you’ve accomplished paying off all your financial obligations, it’s time to start emphasizing on building a savings account. This can assist with falling into the debt trap again in future.
An emergency fund can help with paying for expenses that are out of your control and avoid getting yourself into financial trouble again.
If you must use your credit cards again, try using them responsibly and paying them off as quickly as possible.
Thank you for reading our tips on setting up a repayment plan and getting out of debt faster. We trust this post was insightful and will help you plan smarter financially for the future. Wishing you all the very best as you work towards paying off your debt.
Your article outlines a great way to get started on getting out of debt. It is crucial to have a budget and you sort of elude to that in your first step with writing everything down.
I have been personally working on this now for a couple of years. I am mostly there. I think many folks can benefit from such sound advice.
Hi Annette, Thanks so much for your lovely comment. Well done on being so close to eliminating your debt. Awesome!