The Three D’s of Debt Repayment
It is rare that you will come across someone who actually loves the pressure of carrying personal debt. Whether this amount is $2,000 for Jenny or $50,000 for Teddy, the amount isn’t as important as the fact that it is debt. Eventually, whether you are more like Jenny or more like Teddy, you will decide it is time to take action and put together a debt repayment program. Here are the three D’s of debt repayment that can help put a successful plan in place.
1. Determine. In this stage, you will want to determine a couple of things. First, determine the amount you can afford to inject, on a regular basis, into your debt repayment program. This will often start with creating what traditionalists call a budget. The next part involves determining what debt to prioritize. Ideally, you will want to repay the higher-rate debt first.
2. Devise. In the devise stage, you actually put your debt repayment program on paper. Here, you would figure out your projected monthly balances over the course of several months or even a year (do not go beyond a year as much can change and the plan will require re-writing). Plotting the plan out is important for people with larger debt balances or people who cannot allocate a substantial amount of cash to their debt repayment program. With the plan on paper, you can better track your progress since month-to-month decreases to overall debt will be more subtle.
3. Discipline. Probably the most important aspect of a debt repayment program is discipline. As with any program, discipline will allow you to continue with your commitment (monthly repayment amount) and to see the program come to an end. But with debt in particular, discipline means not using available credit, it means not getting more credit, and it means monitoring your progress as you go along.
Coming up with a debt repayment program does not have to be as difficult and painful as filing your annual taxes. In fact, the whole process will probably teach you a thing or two about your own personal finances. When you keep to these Three D’s, you are more likely to come up with a solid plan that will help you succeed in repaying your debt.
Tags: debt repayment, get out of debt, personal debt, repaying debt