Things You'll Need:
- Statements for your debts (credit cards, loans, etc.)
- Pencil and paper or a computer with a spreadsheet program
- Calendar
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Step 1
List all of your debts, starting with the one with the highest interest rate. Note: Some who have done this plan like to start with the smallest debt. Either way works; pick what best suits you.
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Step 2
Beside each debt, list the minimum payment for each one. Added together, this is the total you pay each month towards debt. For example: Debt#1, $25; Debt#2, $15; Debt#3, $15
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Step 3
Looking at your first debt listed, decide how much more you’d like to pay, in addition to the minimum payment. For example: say Debt#1 has a minimum payment of $25. Checking your budget, you find you can pay an additional $25 towards this debt. So you will now pay $50 (minimum payment + additional $25) each month for Debt#1.
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Step 4
Each month, you will pay the additional $25 towards Debt#1, while still paying the minimum payments for Debts#2 & 3. Continue doing this until Debt#1 is paid off.
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Step 5
When the first debt is paid off, take its monthly payment amount and add it to the next debt. Example: Debt#1 payment ($50) + Debt#2 payment ($15) = New Debt#2 payment ($65)
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Step 6
Continue paying this new payment amount until the second debt is paid off.
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Step 7
Repeat Step 5 with the next debt, tacking on Debt#2’s payment amount to Debt#3, and continuing on until all debts are paid off.
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Step 8
Throw a “Got Out of Debt!” party and marvel at the extra money you now have, thanks to paying off your debt!
