Create Your Own Ultimate Debt Elimination Plan

The method is simple. 1) Set a monthly amount. 2) Pay allminimum amounts. 3) Pay extra money toward the debt withthe highest interest rate.This method will ensure that you pay the least amount ofinterest and repay your debts as soon as possible.The trick to paying the least amount of interest possible isto pay extra money toward the debt with the highest interestrate. Obviously you want that debt paid off as soon as youcan. Each month it costs you the most.The trick to paying off your debts in the least amount oftime is to set a fixed total amount to pay each month. Thetrap many people fall into is that they only pay the minimumpayments. These minimum payments are designed to keep youpaying that high interest rate for as long as possible.By paying a fixed total amount each month, as one debt ispaid off, you will have more money to pay towards anotherdebt. This is often called the "snow-ball" effect.But first things first.First, determine you ability to pay. If your total paymentsare much more than you can afford, you are in trouble. Youmay need to contact a non-profit credit counseling agency.You can find them in your local phone book or online.But be careful of companies that want an up front fee.Check with your local Better Business Bureau forrecommendations.Next you need to make a commitment to stop getting furtherinto debt. Cut up your extra credit cards or put them whereyou cannot easily get them. If you are living a lifestylethat depends on credit, you will soon dig a hole you cannoteasily climb out of.Stop spending more than you make each month and don't counton future bonuses, inheritances, refunds or othernon-dependable income to bail you out. If you make $2000 amonth you can only spend $2000 a month. Look for ways tocut back and purchases you can postpone or do without.Now, let's look at each step of your ultimate debt reductionplan more closely.First, determine how much you can afford to pay each monthtoward your debts. At the minimum it should be the total ofall your minimum payments for the current month.You may need to examine your spending for the last severalmonths. Find things you can eliminate or do without for awhile. Postpone purchases, cancel subscriptions. Anythingto free up more money to pay off your debts.You may even want to postpone investing for awhile. Areyour investments beating that 18% you are paying on yourcredit card? If not, a better investment would be to repayyour debts.Once you have your monthly debt repayment amount set, youneed to write down each monthly debt you are paying. Recordthe creditor's name, the current balance, and the interestrate. Then take a separate sheet of paper and reorder thedebts so that the debt with the highest interest rate is atthe top.Now as each monthly bill comes in pay the minimum payment.Subtract the minimum payment amount from your set monthlytotal. After all the bills are paid for the month, take anyextra money left over and make another payment on the debtat the top of your list.You can make an additional payment this month or save themoney to add to next month's bill. But don't spend it!As each debt is repaid, cross it off your list, but keeppaying the total monthly amount you set at the beginning.This will accelerate your debt repayment and save youhundreds or even thousands in interest charges.The two keys to your ultimate debt elimination plan are to1) stop getting further into debt and 2) set your monthlydebt repayment amount. The rest is easy. You will be debtfree before you know it!************************************************************ © Simple Joe, Inc.David Berky is president of Simple Joe,Inc. which sells the Simple Joe's Debt Eraser PC software.Debt Eraser can help anyone get out of debt quickly andinexpensively by creating a href="http://www.simplejoe.com/debteraser/index2.htm">RapidDebt Reduction Plan. This article may be freelydistributed as long as the copyright, author's informationand an active link (where possible) are included.