Debt Management and Repayment Plan

The big caveat about any debt management and repayment plan is that you have to stick with it. Executing a debt or financial management plan often involves more than plugging in the numbers. You have to commit to a lifestyle change that puts paying off debt ahead of other things like eating out or buying new items. That means creating a budget, sticking religiously to a payoff plan and even taking more work, if necessary.

Write It Down

The first step to tackling debt is to write down exactly what you owe, to whom and what the interest rates are. Put the information in a spreadsheet or money management program so you can keep track of progress as you pay debts down.

Create a Budget

Create a budget. There are several budget formulas. One recommended by MSN Money's Liz Pulliam Weston allots 50 percent of your after-tax income to must haves including mortgage or rent, utilities, car payment, food, tuition and any debts you contractually have to pay a certain amount on each month. Thirty percent of after-tax income is for things you want. Twenty percent of after-tax income goes to paying debts and savings. You can adjust this ratio to pay more on debts if you're in a hurry to pay them off. Even if you're focused on paying debts, most budget experts such as Pulliam Weston recommend an emergency savings account so you don't have to dip into credit cards again.

Cover the Gap

If you've made a budget and you don't have enough income to cover expenses and debt payments, you may have to figure a way to cover the gap. This might mean cutting something out of your budget or cutting many little things out of your budget -- like buying lunch out every day. On the other hand, it might mean getting a second, part-time job. Either way, you need to find a way to bring into alignment what goes out and what comes in.

Choose an Approach

Pick an approach for paying bills off more quickly. You can use the snowball approach, which has you pay off smaller bills first, then roll the amount you paid on that bill into the next bill until all your bills are paid off. You can also use the avalanche approach which tackles bills with highest interest first, therefore saving money on interest. Either way, keep track of the debt amounts going down. It encourages you. In addition, put credit cards away until the debt is paid off. If that takes more than a few months, you may want to make a purchase here and there to keep the card active for credit rating purposes. However, pay the purchase off immediately.