Off The Beaten Track

Debt Elimination: The First Half

Many people don’t know where to begin when it comes to paying off their debt. When you’re in too deep, every bill is too much. No matter which debt you want to tackle, the others will still be there. It isn’t surprising that so many resort to sticking their heads under the sand – it is peaceful and quiet below. However, you need to come up for air and when you do, guess who’s waiting? Yup…

In order to fish your way out, you need to know exactly where you are

Ask yourself the following questions:

  • How many credit accounts do you have?
  • How much (in monthly instalments) are you paying towards each one?
  • How long will it take you to pay off?
  • Which account has the highest interest rate?
  • Are any of the accounts in arrears?
  • Have any been handed over?
  • What are the fees and interest rates like?

It is important to keep track of your debts and know all of the above. You also need to stop using any forms of credit immediately. You will not eliminate your debt if you’re still digging yourself deeper into the debt pit. When I began, I had a lot of debt and not much money to pay it off, certainly not in a month or two. I’d probably still be paying of a bulk of my debt if I had stuck to minimum monthly payments. However, I did develop a system to help me pay off all my debt. Of course, my debt elimination had to come with a decent budget, so that I could check my finances and ensure my plan was realistic.

Deciding which debt to pay off first was probably the biggest challenge. I had a few small, low interest accounts and I had other accounts with larger balances, high interest rates and very high fees linked to them. While it made sense to me (at the time) to eliminate the smaller debt first, leaving the higher debt would simply cost me more.

How did I decide which debt to eliminate first?

I looked at how much disposable income I had and broke it up into portions. The biggest portion went to the biggest debt with the highest interest. Of course, because the amounts of debt were different, some accounts would be paid off before others. As I paid each account off, I adjusted my payments so that the extra money was distributed among the outstanding debt. Below is a dummy example of what my plan looked like. (If it makes you feel better, I had more accounts, and the total was almost double this!)

Debt Elimination Plan


It may seem like a long way to go,  but time flies, and if you’re focused you’ll see that your debt dwindles down in no time. Make it a priority to be debt free, but don’t let it consume you so much that you are stressed beyond what your body can handle.

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