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Making a Plan to Reduce Debt
How to pay it down most efficiently

Having a lot of bills and debt is discouraging, but it doesn’t have to consume your life. There are ways to methodically pay down your debt based on your financial and personal goals and objectives. You will see that, despite how it may seem, there is actually an end in sight.


First of all, it helps to pull your credit report from a site like Credit Karma or Create a spreadsheet with your various debt balances, rates, minimum payments and number of payments left, advises Denise Winston, a financial educator and founder of


At that point, decide what overall fixed amount fits in your budget to pay down your debt monthly. Ideally you will have enough to pay more than the minimum balance on your combined total. That said, pick a few debts you would like to focus on and use whatever extra is in that budget to go toward those balances.


There are a few different schools of thought regarding on which debts to focus:


Pay down smaller debts first


If you are into immediate gratification, this is the plan for you — you can clear up a lot of room in your monthly budget by eliminating the smaller bills first. The downside here is that you could lose the important tax benefits of having big loans paid down, and you could end up paying a lot more interest in the end.


Pay down the loan with the highest interest rate first


The philosophy behind this theory is that it will save you the most money in the long run. The problem with this strategy is that, while you may have more control over your finances, you won’t feel like you do. Doing it this way will take a while for anything to be paid in full, making it difficult to stay focused on your financial goal.


Take a balanced approach


You could opt to combine the two methods. For example, knock out a few of your small loans in a few months and then work on higher-interest debt before going back to paying off small loans again. Another way to balance out your methodology is to pay smaller loans off more quickly if interest rates are generally within a percentage point or two, because that will give you more power to pay off the larger loans later.


Regardless of the plan you choose to follow, make a vow to stick with it.


“As the terms of your loans change or your current situation changes, you can make adjustments to the order of your debt payment plan,” says money management expert Miriam Caldwell of Money in Your 20s. “But you do need to keep paying extra each month.”


Try creating a chart where you can visually track your progress, or celebrate milestones along the way of your debt-repayment journey to keep you motivated and focused on the endgame.


“You will be amazed at how good you feel by simply knowing how much debt you really have and putting a plan in place to get rid of it,” Winston concludes.


Making smart financial decision when you’re young can pay huge dividends when you get older. Speak with us today to get on the right track.

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Disclaimer - All content contained in this newsletter is for informational purposes only and should not be relied upon to make any financial, accounting, tax, legal or other related decisions Each person must consider his or her objectives, risk tolerances and level of comfort when making financial decisions and should consult a competent professional advisor prior to making any such decisions. Any opinions expressed through the content in this newsletter are the opinions of the particular author only.

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