Get Headed Down a Debt-End Course

Facing your debts can be depressing for several reasons. First, all the stuff that caused the debt is not so wonderful and new as it used to be. And the interest rates … Yikes! But the worst, the all-time most horrible thing about facing debt is the realization that given the present rate of repayment, that monster is going to hang around and invade your life like a huge family of freeloading relatives, for a very long time. That’s the bad news.

The good news is that you don’t have to spend the rest of your life aimlessly chipping away at that mountain of debt. You can get into the express lane of debt repayment, the fast track to financial ease. It takes a plan, some strategy and way-down-deep, dogged determination that is resident in all of us.

The plan for wiping out your debts in record speed is fivefold:

You must repent. Boy! That got your attention. “Repent” simply means to turn around, to go in a different direction. You must repent from debting — determine to do whatever it takes to live on the money you earn, not your credit limits. If you don’t start with the first step, the plan will not work.

You must pay the same amount every month until all of your unsecured debts are paid in full. Add up the current minimum monthly payments on all your credit cards and other unsecured debts. Let’s say for illustration purposes that this month, that total figure is $367. From this moment, on adopt this number as a regular monthly obligation not unlike your house payment or car payment. It will not change from month to month. It’s big, it’s ugly and it’s not going away. Just accept it. It is what it is.

List your debts in order according to the number of months left. For example, a debt to a department store of $80 with minimum monthly payments of $40 has about two months left. That one goes at the top of your list.

From here on out, ignore declining minimum monthly payments. Whatever the minimum is this month is the amount you are going to pay until your total debt is wiped out — regardless of whether Citibank or Discover show a lower amount due on your next statement.

As one debt is paid, apply its monthly payment to the next. Using our example above, that first department store debt will be paid in two months. What then? Should you take that $40 payment and go blow it on that great blouse you’ve been ogling? No way! You’re going to send the $40 to debt no. 2 along with its regular minimum monthly payment. Increasing debt no. 2’s payment by an additional $40 each month is going to get it completely paid off much more quickly, to say nothing of shocking the creditor right out of his mind. Then, when debt no. 2 is paid, apply the $40 plus the old payment from debt no. 2 to the next debt. And on and on until every single debt is at a $0 balance. Every month, you pay the same total amount ($367 in the example above) toward your debts.