A Debt Reduction Schedule That Can Help

In the absence of a lucrative inheritance or unlikely lottery win, getting out of debt requires patience, determination and focus. By deciding on a practical and workable debt reduction plan and sticking with it, you can reduce and eventually eliminate your debts, as long as you have some kind of income and the willingness to do what it takes to become financially solvent.

Prioritizing

The most sensible debt reduction schedule gets rid of the debts that are doing the most damage first. Usually, these are credit card debts, because they almost always charge the highest rates of interest. By prioritizing these, you can terminate them first, which will free up the money that you were dedicating to credit cards to attack other debts. Laying out a practical plan that extends over several years will allow you to build up momentum and confidence in reducing your debts. If the plan is too ambitious, it is bound to fail and will undermine your will to cancel your debts.

Keeping Records

Knowing exactly where you stand financially is a central element in your ability to overcome your debts. Many people get into debt in the first place because they don't keep comprehensive records of their finances and don't realize how far into the red they are getting until it is too late. Keep a dedicated notebook in which you write down everything that you make and everything that you spend, with a separate column for each of your debts (credit cards, school loans, mortgage, car loan). This will give you a visual summary of just how in debt you are, and will make your situation more difficult to ignore.

Setting Goals

Setting a series of goals and achieving them one by one will increase your belief that you can actually eliminate your debts. The key is to make the goals challenging enough to make a difference but realistic enough that you can meet them. It's particularly important that you succeed in the first few goals so that you'll start off on the right foot. Make your goals firm but flexible; if you run into a financial setback, don't give up. Reassess your situation, modify your goals to your new circumstances, and continue to reduce your debts.

Sacrificing

Many people get into debt because they want too much. While this isn't true for everyone, there are a lot of people whose debts are the result of foreign vacations and expensive wine rather than true poverty. If you are serious about overcoming your debts, make peace with the fact that you will have to give some things up. Convince yourself that the peace of mind that comes with zero debt is worth more than two weeks in Cancun. Every time you give up a luxury, apply the money that you would have spent on it directly to paying down your debt.