A debt elimination plan is vital when you have a large amount of debt, especially if it has become overwhelming.
You may not know where to begin when looking to eliminate your debt.
As long as you are at least making minimum payments, you can get through it by following a plan to become debt free.
To start creating your debt elimination plan, list all your debts.
Include your mortgage, car payment, personal loans, student loans, store credit cards, credit cards, vacation houses, and even what you owe to friends and family.
Include next to each the balance, minimum payment and interest rate.
Use a free on line calculator to figure out how long it will take to pay off the loan by paying the monthly minimum due.
This will force you to figure out how much you are spending in interest.
Calculate it again presuming you double the payment.
The interest saving is bound to be a huge surprise to you.
It may not be possible to double all of your minimum payments, but even one will make a big difference.
Most people start with the highest interest rate debt.
This is a good way to go but not always the most practical.
You can get frustrated if your highest interest rate also happens to be your highest balance.
To see faster results with your debt elimination plan you can start with the lowest balance.
Say you owe 500 dollars on a store credit card and the minimum due is 20 dollars.
Instead of paying $20, pay $40 dollars.
Do this every month until the balance is paid and then move on to the next one which now becomes the lowest that you owe.
Getting one of your debts paid off is a good feeling even if it isn't the one with the highest interest rate.
This will also keep you motivated.
But remember however that just because you eliminate one debt you don't now have license to spend more money.
If that store credit card now has a zero balance don't go shopping...
better yet, cut up the card.
When you move to the next smallest debt don't just double the payment, include what you spent on your previous debt as well.
If you owe 3,000 dollars on your credit card and your minimum is 80 dollars, use the 40 dollars from the previous debt and add it to this one.
So, instead of 80 dollars you are paying at least 120 dollars every month.
If possible, try doubling the payment.
If it is hard to double just add 10 extra dollars every month.
Start with 120, the next month pay 130, the next 140 and so on.
Look as well into the possibility of getting a lower interest rate on your debts, especially if you are having a hard time paying the monthly minimum.
Call your card companies and ask to negotiate a better rate.
This is a good strategy even if you can easily meet your minimum payments.
(Why pay more than you have to?) Very common items to consider are for instance consolidating all your insurance policies with one company to achieve some savings.
You can then apply this saving towards paying your debts.
Take a look at your past cell phone bills.
You could likely be paying for a lot of unused minutes.
Switch to a cheaper plan or get a prepaid phone.
If you owe any money to friends or family, get them on board by telling them of your plan.
You may not be able to repay them right away but they will appreciate your efforts and may be more patient with you now that they know that you are trying to improve your situation.
Give them an estimate of the time it will take before paying them back and do it as soon as possible.
Think of this each time you want to spend on an unnecessary item and put that money aside instead to meet your debt elimination plan.
Follow this debt elimination plan strategy until every debt is eliminated.
Sometimes with a mortgage you cannot double the payment, but do what you can to eliminate the debt by following your plan.
You are well on your way to being where you want to be financially.