How to Make a Debt Reduction Plan that Works for You

by Miranda Marquit · 0 comments

Most people who end up in debt get there for different reasons. However, once you decide that you are tired of the bondage and uncertainty that comes with debt, it’s time to make a debt reduction plan that works for you. As you decide how to proceed, here are some tips to keep in mind as you create your debt plan:

What’s Realistic for Your Financial Situation?

You might want to pay off debt as quickly as possible, and that makes sense. However, before you tell yourself that you are going to pay off tens of thousands of dollars of debt in a year, you need to consider what is realistic for your situation. Yes, there are inspiring stories of people who have attacked their debt aggressively and become debt free in a relatively short period of time. But that’s not feasible for everyone.

Some of the things you have to consider as you put together a debt reduction plan include:

  • How much money do you make? How much can you realistically contribute monthly to the cause?
  • Are there ways to make more money? Look for ways to improve your finances.
  • What other obligations do you have? Do you need to take care of legal obligations or other requirements as well?

Take an honest look at your finances. Perhaps it makes more sense to start small and then work on making changes that can eventually add up to doing more. This is one of the reasons that the debt snowball is so popular. It encourages you to start with your reality and go from there. You can also gain increased traction with a method called snowflaking.

Start from a place where you can keep with the changes, and then gradually accelerate your efforts. You need to make sure that your debt paydown plan is sustainable over time.

Family Situation

You also need to take into account the realities of your family situation. In some cases, it doesn’t make sense to force your spouse and your children into the same extremely austere measures you are willing to take. In order for your debt reduction plan to be successful, your whole family needs to be on board.

Talk to your family about the situation, and consider plans that you can all get behind as you move forward. Make sure that you are all contributing to the solution. Otherwise, you will just end up fighting a futile battle. Decide, as a family, what is most important to you, and base your debt reduction plan around that. You all need to sacrifice, but it needs to be something that everyone agrees is necessary.

This might mean that things move slower than you would like. When my husband and I tackled our own debt shortly after we married, he didn’t want to aggressively pursue it. We ended up taking longer than I would have liked, but we did succeed, and we did so at a sustainable pace that allowed us to change our habits permanently. It makes sense to get input.

Put together a plan that works for you and your family, and you will be more likely to succeed long term.

Bonus Tip:

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