Your Debt Repayment Plan Starts Now!
Debt repayment is a big business especially for those collecting because interest adds up and when you are only paying the minimum balance on credit cards and loans you’re making someone else richer.
When she belted out the words “I hate knowing how much debt I owe” in anger just before breaking out into tears I knew it was serious but was SHE serious about doing something about the financial mess she’s created.
This was a family friend who we thought was doing well financially but it seems a blanket of darkness has fallen on her and for some reason we were the chosen one’s to give her a boost.
We were standing in her kitchen getting ready to take the kids on a Christmas shopping trip to the mall and to see Santa when she was reading a credit card statement that had come in the mail.
Christmas was around the corner and the mass shopping frenzy had started and this is what caused her outburst and she’s not alone.
There’s something in the air before and after the holidays that cause people who owe too much money to debt repayment to hide from it.
You NEED to know
There are plenty of people and perhaps even you reading this today who are budgeting and frugal with every dollar because you know you have to be in order to steer clear of debt.
Congratulations you perhaps may have been at one point blinded by the amount of debt you had or simply thought you could make it out alive without counting your numbers and documenting every dollar.
I used to be that way, we used to be that way, but not any more.
I’m not talking about ball-park figures here because if you’re serious about getting your finances in order and paying off the debt that may be cramping your style you need to step up your money game.
Over the years I’ve been blogging at Canadian Budget Binder I’ve been involved with many conversations through email and social media and the one thing that struck me as odd was those people who didn’t know that debt number.
Why don’t people know how much debt they owe?
- Spending and living a lifestyle they can’t afford is more important
- Worry about on an as-needed basis
- Too much debt to care
- Not keeping an eye on their financial health (budgeting)
Off the top of my head I’m betting that forgetting about debt repayment is like taking out the trash, automatic especially if you don’t have the means to pay it back OR are not trying hard enough to find a way to do so.
Most often I find that for those people who are drowning in debt don’t know how to tackle debt repayment because they have so much of it spread out over various credit cards and loans.
Even then looking at debt numbers on an individual basis can be deceiving because the smallest debt always seems like the least of your worries.
The problem with that is when there are multiple debts owed and the smallest is actually big and the biggest is even bigger.
Catch my drift?
What is debt repayment?
As simple as the words state, you are paying back money that was offered to you whether it be on a credit card or various types of loans.
It was money you hadn’t earned yet but spent it anyways for reasons only you have the answers for.
Debt repayment can become overwhelming, depressing and cause people to do things they shouldn’t be doing like ignoring the debts they owe.
They say that everyone you meet you meet for a reason and perhaps having this cold conversation about debt was more of a wake-up call for her than a sympathy break.
As much as I love to talk about finance when it comes to people who are struggling with their money and not doing a damn thing about it I get real very and fast.
You don’t have time to mess around with your debt and the number one thing I will tell you is TO STOP SPENDING MONEY.
Sounds easy enough to say but often it falls on deaf ears if someone isn’t committed to self-help.
If by now you can’t figure that out or stop yourself from spending money you don’t have you may need;
- Professional financial help from a financial counsellor/advisor
- Seek Professional Help (If mental health)
- Friends and Family support (if available)
Numbers two and three are sometimes the last place people will go because they are too embarrassed to tell anyone they are struggling but you may be surprised how many people have been down the same path and survived it.
They can be an arm of support for you.
Getting debt in order
After an afternoon of filtering through a mountain of bills and other paperwork Mrs. CBB was able to sort out debt that was owed, interest rates and help our friend start using our simple budget.
We created a debt repayment plan sheet that she could print, update and keep with her financial records or somewhere that would motivate her to keep going such as hanging on the refrigerator.
It turns out that she owes a grand total of just over $8000 on four different credits cards with similar interest rates.
That might not seem like lots of money to the person who has little to no debt or a hefty savings account but for her it’s Mount Everest.
Now she has a budget in place and a plan to pay back her credit cards using the snowball method which is paying the smallest debt off first and the minimum payment on the larger debts.
This method may not work for everyone but since she has what I consider a manageable amount of debt this will work for her.
Debt repayment for the win
Your debt repayment plan is in place which gives you peace of mind knowing that there is light at the end of your tunnel.
Given her annual income of $80,000 and her new budget lifestyle if she sticks to the financial plan that we gave her she will have her debts paid off with-in one year or even less.
It amazes me how many people start budgeting and once they see how fast they can get rid of their debts because they are mindful of spending habits they turn it into a game of how fast can I lose this debt.
All she needed was someone to talk to who was willing to help but even then not everyone you know is money smart and passing on the best financial advice.
If you’re unsure stick with number one on the list I provided above because a financial counsellor may be best suited for this role rather than a friend.
Just remember that having a credit card or taking out a loan is not always a bad thing as long as you have the means and mindset to pay it back without costing yourself more money than it’s worth.
You can download your free debt repayment plan printable from the Free Downloads Money Saving Tools Page.
Discussion: Have you made any mistakes with debt repayment that you’d like to share for readers who need motivation? Please share your comments and tips below.