Let’s face it, getting into debt is too easy and getting out of debt is a challenge. I know when I was getting out of debt (read my debt story). I thought I was doing everything right;making my debt payments on time and paying a little extra on all of my debts. There was no plan or strategy for getting out of debt. I thought debt was something that everyone had and it was a part of being an adult.
I wasn’t serious about getting out of debt. When I realized that there is such a thing as being debt-free, I created a debt repayment plan to eliminate all of my debt. This plan worked for me and my family, I am currently debt-free except for my mortgage (working on it). I am sharing with you the same worksheet I have created and used to get myself out of debt. I hope you will find it beneficial.
A debt repayment plan is a strategy to pay off all of your creditors, including family members. Usually, it is easier to get a loan from mom and dad versus a bank. When we get the loan from mom and dad, paying them back goes on the back burner. That needs to change (read my post about why I don’t loan money). Just because mom and dad can’t ruin our credit doesn’t mean money can ruin/change the relationship.
The key to paying down debt is using the snowball method. First you must budget how much you are going to pay on your debt every month. I recommend 5% to 15% of your monthly income only for debt repayment.
Focus on your debt one creditor at a time starting with the smallest balance. Starting with the smallest balance will help eliminate creditors faster. While paying off the smallest balance, only pay the minimum balances on the rest of your debts. Any extra pennies you can put toward your current debt priority will help.
Now that you better understand my definition of a debt repayment plan, let’s get started becoming debt –free. Starting at ground zero, we need to list all debts; this includes family debts and bills that are in collections. I have created a worksheet that has helped me and it is available for free download in The Vault. Print a worksheet for each creditor. Keep these papers is a handy place because you will be using them every month.
I hope this worksheet helps you create your own debt repayment plan. Keep these sheets accessible so you can stick with your plan. Does your debt still seem overwhelming?
Proverbs 22:7 – The rich rules over the poor, and the borrower is the slave of the lenders.