Struggling with Debt? Make a Plan to Pay It Off

With the New Year just underway, many people have made resolutions to improve their lives.  And for many improving their finances is at the top of the list.

Getting out of debt can be a big and almost overwhelming goal.  It’s not a fast process and it takes a lot of dedication, but it is worth it in the end! 

So where do you begin? 

First, start by getting an accurate picture of where you stand.  Gather up all of your recent debt statements.  This includes credit cards, car loans, student loans, any personal loans or other big ticket items, and your mortgage.

Run your credit report.  Although there are lots of paid online sites that offer this service, you can request a free copy every year at www.annualcreditreport.com from all three credit bureaus.  This is a great time to check for any mistakes and make sure that every debt on your credit report is included in your list.

Create a debt payoff plan.  Create a spreadsheet with all of your debt information. Include the name of the debt, total balance, interest rate, and minimum payment. Then figure out what order you want to attack your debt. Some organize them from lowest to highest balance, while others prefer to pay off the debt with the highest interest rate first.

Whatever you decide, here’s the trick:  Once you pay off your first debt, combine that payment with the second debt.  For example, if you're paying $50 each month to a credit card, once it is paid off add that $50 to the $50 you're still paying to the auto repair shop that fixed your brakes last fall. Now you’re paying a lot more then the minimum and it just keeps growing as you go!

Look for ways to keep adding money to your payoff. Sell unused items around the house, have a yard sale, clip coupons, or even get a part-time job. Cut out one restaurant meal every week and add that to the pot. Just do whatever it takes to keep your momentum up!

Get the whole family involved. Make getting out of debt a family goal. Put your payoff on the fridge and count down. Let the kids help with the family budget.  When everyone understands what you’re working toward, they’ll be more likely to cooperate when the budget is tight.

And how can you find a few extra dollars toward your debt payoff?  Save on your monthly insurance costs!  SAV-ON can help.  Call us at 888-867-2866 for a review of your policies to see if there are places you can cut, or get a quote on your auto, home, business, and life insurance. We can usually save people money on their insurance!