Turning Point Financial

Need Help Paying Off Debt?

Many people today stuggle with paying off debt, especially consumer debt.  Here are four simple steps you can follow to stop accumulating it, and start paying it off.

1.  Admit that you have a problem and commit to fixing it.  This is the first step in becoming successful at paying off debt.  Until you admit that this is a problem for you, you will never be able to change your behavior and habits.  This is no different than any other habit a person may want to change, like sleeping too late, eating too much, being late to appointments.  It may not be easy, but you can learn to do it and become very good at it.

2.  Stop debt spending.  Before you can start paying off debt, you first need to stop accumulating new debt.  To help yourself to do this, you need to make it difficult for you to debt spend.  Many people who have done this in the past have cut up credit cards that they don’t really need so they won’t use them any more.  Of course you probably need to keep at least one card active, but do you really need more than that?  I have also heard of people freezing the one card that they can use in a block of ice in the freezer at home.  This way, if they really need it, they can thaw it out and use it.  But it’s not in their wallet, easy to use any time they want it.  In a sense you are stopping the bleeding of a serious wound by taking this important step, and it’s necessary if your goal is paying off debt.

3.  Make a spending plan.  If you plan out in advance how much you will spend each month, and then make sure you don’t go over that, you will be much more successful in paying off debt.  Setting a budgeted amount of what you will spend on certain items like groceries, gasoline, dining out, entertainment, travel, gifts, etc. is the first step.  Second and even more important is the tracking of your monthly spending.  After doing this, you should know how much extra “debt-payment” money you have available each month to put towards paying off debt.

4.  Pay down your debts.  Now that you’ve created and are following a spending, you should be able to pay all your bills and hopefully have a little extra each month to go towards paying off debt.  Here’s how you can do it:

* Create a list of all the debt payments you make each month.

* After you’ve completed this list, note how big or small your debt problem is.

* Return to your monthly spending plan and the amount that you think you can save each month. (This is the extra money that you can use to pay down debt.)

* Look at your list of debts, and choose the one to pay off first. (We recommend starting with the smallest debt).

* Add the extra “debt-payment” amount to your regular payment for the debt that you’ve chosen to pay down first.

* As soon as you pay off this debt, apply the entire amount that you’ve been paying towards debt amount each month to the next smallest (now your smallest) debt amount.  Now you are sort of making a double payment each month on this debt.

* Keep it going!  Stay with this plan until all your debts are paid off!