Debt Repayment Requires These Three D's
Very few people actually enjoy the pressure associated with carrying debt. While we are all different and carry different debt loads, the point is that debt wears us down. It's not so much the amount as it is the concept. Eventually, we come to a point in our lives where decide to hunker down and come up with a debt repayment program, but since this is new for us, we often don't know where to start. Here we put together the three D's of debt repayment.
1. Determine. The first thing you will need to do is determine two things as they relate to your debt repayment program. The first is how much you can afford to repay on a monthly basis. You can realize this through the dreaded budgeting process. The second thing you need to determine is which debt needs priority and what debt can be less of a priority. You will normally base this determination on rate, but it could also be based on cash flow.
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. Arguably the most important D of all of them is discipline. When it comes to a debt repayment program (or any program for that matter) discipline is required in order to ensure the plan is followed through to the end. With debt, this means chugging along at a regular pace with your repayment amount and not touching available, revolving credit. It means being disciplined to review your accounts on a regular basis and tracking your progress against your plan.
Creating a debt repayment program does not have to involve pain and discomfort (like filing your taxes). Realistically, the process should energize you and teach you things about your finances you never realized. By keeping the three D's at the forefront of your process, you are more likely to succeed in repaying your debt.
1. Determine. The first thing you will need to do is determine two things as they relate to your debt repayment program. The first is how much you can afford to repay on a monthly basis. You can realize this through the dreaded budgeting process. The second thing you need to determine is which debt needs priority and what debt can be less of a priority. You will normally base this determination on rate, but it could also be based on cash flow.
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. Arguably the most important D of all of them is discipline. When it comes to a debt repayment program (or any program for that matter) discipline is required in order to ensure the plan is followed through to the end. With debt, this means chugging along at a regular pace with your repayment amount and not touching available, revolving credit. It means being disciplined to review your accounts on a regular basis and tracking your progress against your plan.
Creating a debt repayment program does not have to involve pain and discomfort (like filing your taxes). Realistically, the process should energize you and teach you things about your finances you never realized. By keeping the three D's at the forefront of your process, you are more likely to succeed in repaying your debt.
About the Author:
Chris Blanchet is the author of the Personal Finance E-Book Help Fix My Finances, which incorporates all of the three D's discussed here. In addition, he maintains a Debt-Free Blog at How To Repay Debt.com.
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