Creating a Debt Elimination Plan

Methods of eliminating debt could involve cutting up the credit cards that are owed. That, for me is most vital in accepting that I have a problem with debt. Also any other debt amounts owed on other areas should also be identified. Lifestyle habits must be addressed along with the personal debt picture overall.

People who have debts should then encourage themselves to avoid the temptation to spend on luxury and unnecessary shopping grocery items that they simply can do without. The credit cards must be cut up, destroyed, and most importantly the account frozen or cancelled upon full repayment.

A credit elimination plan in circumstances where the consumer has no savings to offset the debt will find themselves trying to deal with a situation of acknowledgement that there are a number of ways that their overall debt can be reduced either gradually, partially, or completely paid off in full.

Gradually paying debts off, would involve paying off the highest rate of interest borrowed. So say if I had three credit cards all with different total amounts, I would therefore aim to firstly pay off the card that had the highest rate of interest attached to it. I would consider a balance transfer if I did not have enough personal savings to pay the card in full. Then I would ensure I met at least the minimum repayment each month, to maintain my credit status. I would find areas of my spending where I could cut back on, i.e go without buying PC games, or shopping trips etc. The savings each month would be saved in cash or via less bank account activity to help pay off the debt. It provides a welcome relief when debts are appearing to be reduced significantly. The final hurdle is when it is all paid off.

Savings is an area whereby debt can be eliminated. This is to say that a person with say $10,000 in bank deposits, and $5,000 in debt, might feel less pressurised in this case as his savings should be used immediately to avoid paying the bank, expensive interest rates.

Also the time frame should be addressed of pay back of the debts. It can range from one week, up to say many years to realistically measure “how fast am I going to pay these loans”. Naturally the sooner the better.

Other ways a debt elimination plan could be to use a number of different personal asset sales, via selling goods on Amazon, eBay etc. Maybe also use of car boot sales to achieve fast cash receipt to help finance the debt. Also finding additional secondary income would also help eliminate debt.

In saying these steps, once your debts are paid off, then congratulate yourself, and make sure you cancel all accounts with the respective banks. Cut up all cards is probably the best way at trying to avoid temptation to use the card to buy small items even after all the debt is paid. By not having a credit card to use, and be not re applying again for a new one, will help to avoid the same mistakes later on.