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Home / Debt / Debt Elimination: Transitioning from Plan to Action


How many times have you wanted to be out of debt and free to spend your paycheck anyway you want to? That is where it ends for many of us; where the ”want to” ends and the ”how to” begins. Here is a system that I used to attack various debts that I had accumulated.


I had the same trouble that many people do, I did not want to live tied to the tether of a budget. That led me to reckless spending, late payments, and always being on the edge of a financial meltdown. Once I finally decided to form a budget, I wasn’t very good at it because I had no clue what I was doing. Try starting out by buying a pocket notebook. Write down everything you spend. Do this for three months at least. Monthly bills, fuel, candy bars, even meals. While you are doing this, open a separate checking account that you will be paying your recurring bills out of.

Once you have tracked your spending for three months, it is time to build a budget. There are several online tools that you can use. I prefer the old school approach of a pen and paper. Mainly because I like having a visual reminder of what I am doing. Step one might be to recognize obvious waste in your spending. There is going to be something that jumps out at you.

After you looked over those spending records, start listing your monthly bills. Be sure to include a weekly amount for fuel, groceries, and your emergency fund. Treating these items like they are a bill will help you track and control each. Your budget should also include a date or treat night each month. Even if it is something as simple as renting a movie or video game, you must do something fun or you will fall off the wagon eventually.

Tackle Your Debt

Once you have established a budget, work it for about six months to be sure you have the kinks ironed out and have eliminated as much waste as you are comfortable with. Now, it is time to tackle your debts. You only have one realistic option, that is to take them on one by one. That means more planning. You have a choice to make. Do you attack the debt with the lowest balance or the debt with the highest interest rate? The answer depends on your personality. Are you the instant gratification type or can you take a little time before you see a reward? I choose to get rid of the highest interest rate (a credit card), so I’ll describe that process.

First, you need to make the minimum payment on time each month, but keep your statement. I stuck to the minimum because my plan included weekly payments. The next week I took that statement out and made a payment equal to the interest charged to my account. The third week of the month I sent in a $50 payment. The last week of the month, my plan was to send another $50 payment, but life being what it is, that payment did not always get sent. The most important thing to do is maintain your minimum and pay all of the interest each month. You will see your payments and balance dwindle on a regular basis. Once I was comfortable with this method, I made all of the planned payments and occasionally sent more than the minimum. It took two years, but this debt melted away. Slowly, but it did disappear.

Now, it is time to rinse and repeat. Look at your remaining debts and prioritize one, then follow the steps above. You can make additional payments on mortgages and most installment loans, as well. Be sure to check with your lender about any rules or guidelines they have about that sort of thing before you begin.


About the author: Jerry Coffey


Jerry Coffey spent many years in a debt-riddled gray area somewhere between broke and desperately broke. His seemingly endless need for more and more cash led him to payday loans, repossessions, bankruptcy, and depression. After years of the same financial style, he heard a piece of advice that inspired him to find a way to change. The advice: ''The very definition of a fool is someone who continues to do the same things, but expects different results.'' This led him to a much more frugal lifestyle that sees all of his bills paid on time and a growing savings account. Even the seed of a retirement account has begun to sprout.


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