#freshstart2017: Make a Debt Payoff Plan

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If you have debt, and you probably do, it could be holding you back from getting ahead. When you tallied it all up, were you surprised by how much you're responsible for? The average person has about $16,000 in credit card debt, but only believes their total owed to be around $9,500. How can someone not know how much they owe? Lots of reasons! It's easier to ignore the situation; they think they'll "hit it big" and take care of all that mess; everyone has debt so what's the difference? The difference is that when your debt to income ratio is lower, you pay less for the money you borrow. That means that a person with no debt has more opportunities to get ahead than a person with lots. A person without debt probably doesn't live paycheck-to-paycheck. A person without debt sleeps a little easier at night.

There are few ways to pay off your debts, but my favorite is my boy Dave Ramsey's Snowball Method. I've used it myself and it works.

First, list your debts from smallest to largest.

Make minimum payments on all of the debts, except for the smallest. Just throw as much money as you can at that one until it's at zero. Once it's paid off, take all that money and apply it to the next smallest debt, and so on until you've smashed them all. Here's a very, very simplified example:

Image Credit: Sapling

Say these are the debts that you owe, not too much, but still. Yikes! After you've made some changes and found the wiggle room in your budget, you may have a few hundred dollars "extra" per month. If you apply that to these debts using the Snowball Method, it would break down like this:

Image Credit: Sapling

In just six months you would have half of your debt paid off: Behold the power of the Snowball.

However you decide to do it, just do it already. You're going to have to deal with it sooner or later and if you wait too long you may never be able to get ahead. Get started today and thank yourself next year.

Image Credit: Jamie Stoltz

Get yourself started today with these excellent worksheets:

Download the pastel worksheet HERE

Download the flamingo worksheet HERE

Download the pink and blue worksheet HERE