People are always claiming to be serious about becoming debt free, and then out they go and drop $3 on a coffee, $30 on a book, $60 on a new pair of shoes. The little things we spend money on may improve our lives for the time it takes to consume them, but they do nothing for our long-term goals. If you’re serious about becoming debt free, you can do it. But you have to have a plan.

Step One. Put Snowballing to Work. List your consumer debts (not your mortgage unless you’ve done a mortgage consolidation for debt) from most expensive to least expensive, noting your interest cost, your total debt and your minimum payment amount. You might have something that looks like this:

1. Buy-now-pay-later         32%            2100             84
2. Department Store CC        28.8%          700             28
3. Department Store CC        28.8%        1200             48
4. Credit Card                       18.9%        3000            120
5. Credit Card                       14.9%          400              16
6. Student loan                     11.6%      13700            548
7. Car loan                            10%         25,000           650
8. Personal Line of credit        9%         15,000           112
9. Second mortgage/Consol   8%         28,000           212
10. Home Buyer’s Plan              0%         18,000           100
11. Family                                 0%            2,800               0

The idea of the list is to prioritize where you’ll make your payments. You’ll start at the top, with your most expensive debt. (I know some people like to start with their smallest debt, but that’s not efficient.) As that’s paid off, you move to your next most expensive, all the while making the minimum payments on everything else so you stay in good standing with your credit history. Each time you move down the list, you’ll snowball. You’ll add the payment you were making to the most expensive debt you’ve just paid off to the next most expensive that you’re about to tackle.

Step Two. Start today. Like eating smart, exercising and everything else in life that takes discipline, the number one cause of Not Doing It is PROCRASTINATION. You have to wait until your next pay period. You have to wait until you know you have some extra money. You have to wait… and wait… and wait… How’s that working for ya? Any closer to being debt free? Nope? Well then Start Today. 

Step Three. Make a budget. If you don’t know where your money is going, you don’t stand a hope in hell of being debt free. You have the tools on this site. Go to the Gail’s Budget Worksheet and make a budget that balances. The amount you put in for debt repayment will equal the total of all your minimum payments.

Step Four. Cut back. Go over your budget with a paring knife and trim out all the non-essentials that are sucking away your money. How much did you come up with? Do it again. Now how much do you have? Do it again. And again. You want that budget to be so tight it squeaks. You’re going to add whatever you’ve squeezed out of your budget to the payment on your most expensive debt. So if you managed to squeeze out another $300 from your budget, you add that $300 to the minimum payment on the first loan on your list.

Step Five. Make a payment. Don’t wait for the due date. If you owe money it’s always due. And the faster you make a payment, the quicker you turn off the interest clock.

Step Six. Every penny counts. Start carrying a notebook around with you, and whenever you save money on something, write it in your notebook. When you get home that night, make a payment of however much you’ve saved that day against the debt that’s at the top of your. Now you’ve put what you saved to good use, as opposed to just spending it on some other crap.

Step Seven. Every penny counts, repeated. Scour your house for all your change. And every time you empty your pockets of change, add it to your change pot. At the end of every month, deposit it to your bank account and then immediately use that money to make a payment against your most expensive debt.

Step Eight. Sell stuff. Have you heard? Less is the new more! Go through your home, room by room, and choose two things you can live without. Have a yard sale, list things on craigslist or eBay, or sell things through a consignment shop. You might not get a lot for whatever you’re selling, but whatever you get is money you won’t have to pay interest on. Apply that money to the debt at the top of your list.

Step Nine. Make More Money. You knew it was only a matter of time before I got here, right? You have no time to waste if you’re in debt. Turn your time into money in whatever ways you can.

Okay, that’s the plan. Now it’s up to you whether you implement it or not. If you choose not to, you can’t whine about being in debt. Nope. You’ve made your bed and now that it’s full of flees, you’ve only the dog in the mirror to blame!

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