How to Use a Debt Elimination System

If you’re walking around with a pile of debt, it can be overwhelming. Although it can really make you feel terrible, you’re not alone! Millions of other individuals all over the word are carrying the weight of the world on their shoulders as well – trying to avoid creditors’ calls and threatening letters. Not only are they intimidating, but they don’t do a whole lot for the morale either. If you want to get out of debt quickly, follow these 5 simple steps for how to use a debt elimination system.

Difficulty: Moderate

Instructions

1. List all of your monthly payments. The first step is to collect the most recent statements for all of the bills and debts you owe on. This includes payments that have gone into default, to collection agencies, etc. Make a list of them, starting with the debts which have the lowest balances. So, if you have a credit card balance of $600 and one with a balance of $10,000 – the $600 one would be first. Make sure to list out the owed balances, the interest amount and the minimum monthly payment on each.

2. Calculate your income and expenses. Once you’ve created your list, you will want to calculate how much money you can devote to your debts by adding up every bit of income you have coming into the household each month. Then, add up all of your monthly expenses and subtract that from the income. What you have is your profit money, except it’s not profit if you’re in debt! You should devote as much as possible of this money to your debts in order to get out of debt quickly.

3. Start paying your debts. The trick to this debt elimination system is to pay the minimum payment on all of your debts except the first one. For the first (lowest) payment, it’s very important to pay as much as you can afford. If you can afford to pay the whole thing off in one whack – do it! Once you’ve paid the first payment off, transfer ALL of the money you were devoting to the first payment on to the next payment, plus the initial minimum payment you were paying on the second one.

4. Cascade. The trick is to continue doing this so each time you pay off a payment, you’re adding more and more money to the amount that you’re using to pay off the debts. As you pay off the payments, you will gain speed in paying off the rest. This is called the snowball effect or the cascade method and it’s a really great way of getting out of debt quickly.

5. Notify the credit bureaus. Each time you pay off one of your debts, send the statements which state 0 balance as well as all of your receipts to the credit bureaus. Send a note along with these and include your social security number so the credit bureaus can change your credit record to reflect the paid off debts. As you continue to pay, your credit score will continue to rise.

6. By using this debt elimination method, you can really save money and get out of debt quickly.

Resources

• Squash debt quickly with this proven plan!

[markhenry]

on 1/25/2009 Helpful article. Thanks for sharing

[openwave]

on 1/23/2009 Great Job

[wlrahilly]

on 1/23/2009 Great article! :D

[Ericcanuck]

on 1/6/2009 Great article.

[DulceMaria]

on 12/16/2008 Thanks for posting this great article, I will added into my favorites so I can go back into it. I am trying to get debt free, and this sounds like a great eliminating plan for me.