5-Day Debt Reduction Plan: Pay It Off
Thursday, November 2, 2017, 6:00 PM | Leave Comment
As you’ve learned how budgeting can play a major role in finance management and made your ideal budget plan, also found the tricks to save some extra money; now all you want is to clear all your debts.
You are ready with the money to shell off your debts; Is it enough? The answer is a big “NO”.
Success in debt reduction depends upon the right strategy you choose for planning your debts. Your thoughts would be of financial planning & investment, keep a note on the fact that debt management could make a huge difference.
Here are some interesting finance tips that would give you an insight of the 5-day debt reduction plan but before that it is important to know about how debt reduction can benefit you.
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Why you need debt reduction?
A couple of reasons:
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You have the freedom to work less
How wonderful is it to imagine yourself free from the work commitment. The more debt you have the more you have to work. It would be great if you have very just few bills to pay.
It will be totally stress-free when you have to work for less hours like 20 to 25 hours in place of 40 to 50 long hours.
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You can retire while you’re still young
Debt reduction has one great advantage, that it will help you to cut unwanted debts thereby reduces your monthly expenses and free up some cash that you can use for investment purposes thus you can also consider retiring a bit earlier.
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Now let’s look at 5-day debt reduction planning tips for 2017.
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Switch up your strategy
If we ask you a question “Are you in debt”? The obvious answer would be “Yes”. The study shows that only a small percentage of people are without debts. Before you think of debt reduction, you must plan a strategy.
When it comes to debt reduction, there are two methodologies and you are free to choose that suits you:
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The snowball method
It is important to know your debts in detail. So, pen down all your debts from the smallest to largest regardless of the interest rate.
Now, clear the small amount of all your debts and if there is any remaining amount then pay-off smallest balance first.
Now that the smallest balance is cleared, move to the next smallest balance and do the payment along with the extra money.
Just continue this process until all your debts are cleared.
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The avalanche method
This is a different method all together. Firstly, list down all your debts from the highest interest rate to the lowest interest rate.
Start reducing the debts by paying a small amount for all debts, and put the extra money to the debt with the highest interest rate.
In terms of interest paid, this method gives the maximum savings.
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Track your progress
Tracking your progress of debt is an essential step in order to keep yourself motivated.
Carrying a huge debt would make you feel burdened and stuck from moving on towards your life goals.
You don’t have to check your balances every day but it is advisable to recalculate what is left every couple of months.
This updated balance will be a visual reminder to stay focused.
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Celebrate milestones — you deserve it
At the end of the day when you have cleared all your debts, it feels great. It is actually an extensive venture to clear off debts and once done, it calls for a celebration.
It is good to respect human emotions and give yourself a party; appreciate your hard work.
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Find an accountability partner
Finding an accountability partner is at times better which shows that we are accountable to someone.
It doesn’t mean that you should share with everyone about your debt but probably a good friend or trustworthy relative can be the right person to motivate you to be on track.
This person would keep you focused with a timely check and in turn will boost your progress.
Also, he would offer you the necessary support and ideas to keep you away from impulse buying.
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Remember why you’re paying off debt
At every stage, just remember the reason why you’re paying off debts. The process to clear all your debts is going to take a long time but it is important not to lose track once you have come to this stage.
Whenever you feel de-motivated, just turn back to the time when you started this journey and what motivated you towards this venture.
Now that you know the benefits of debt reduction, choose the right strategy which suits you and make your own 5-day plan.
The strategy you choose should guide you to have a working plan which yields the maximum savings. Hope these tips give you an idea how to begin with. For more updates keep reading our blog posts.
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James is a solo blogger and writer at a personal finance blog, where he writes & educates people about personal finance and money management. While she is not writing, you can find her cooking & home decorating.
