How to Create a Debt Payoff Plan That Actually Works

If debt is a concern that makes it hard to concentrate at work, keeps you up at night, or makes you second-guess every purchase, it’s time to do something about it. Millions of people are juggling credit card balances, loans, and financial obligations that grow faster than they can be paid off. Century Support Services helps clients establish a debt payoff plan to end this cycle. Whether you’re seeking professional assistance or plan to tackle it on your own, here are some key strategies that will help you reach your goal without requiring a winning lottery ticket.

Assessing Your Current Financial Situation

Admitting you’re in debt isn’t enough; you need a clear view of where you stand financially. Facing the numbers is scary, but it’s where you must start, and once you see them, they can be less intimidating. Focus on:

• Financial Statements – Gather credit card bills, student loans, car payments, and any personal loans. On a spreadsheet, note the balance owed, the interest rate, and the minimum monthly payment.
• Cash Flow – Tally your monthly net income. List your monthly expenses, including housing, utilities, food, transportation, cable, internet, streaming services, etc. Don’t leave anything out. Subtract expenses from your income and see what’s left. This will tell you how much you have available to start chipping away at debt.

There are always areas where you can cut back on spending to increase your available cash for debt. Small changes, like cooking at home more often or canceling unused subscriptions, add up and can accelerate your progress.

Choosing a Debt Payoff Strategy

There are several options for your credit card debt payoff plan. Some are strategies you can try on your own, while others include working with professionals:

The Debt Snowball Method

When you attack the smallest debts first in this approach, the psychology of a quick win keeps you motivated to go after larger debts. List your debts from smallest balance to largest balance, ignoring the interest rates. Pay the minimum on everything else, but throw every extra dollar at the smallest debt. When that first debt is gone, you take the money you were paying on it and roll it into the payment for the next smallest debt.

The Debt Avalanche Method

This doesn’t have the fast reward, but it is the best option for saving money in the long run. List your debts from the highest interest rate to the lowest interest rate. Focus all your extra payments on the debt with the highest interest rate, while making minimum payments on the others. As you eliminate debts with high interest, you’ll save on finance charges and have more to put towards lower-interest loans.

Debt Consolidation Loans

If your credit score is in good shape, you can apply for a new loan to pay off multiple smaller debts. The strategy is that the new loan will have a lower interest rate than your current credit card bills, saving money over time. It’s also easier to manage a single monthly payment to a central loan rather than spreading payments across several lenders.

Credit Counseling

Credit counseling agencies can also work with your lenders to reduce your interest rates. You make one payment to the agency based on the Debt Management Plan (DMP), and they disperse funds to your creditors.

Debt Settlement

Financial hardship and high levels of debt can make a payoff plan challenging. If you’re missing payments or can only make minimum payments, so that it would take years and years to pay it off, working with a debt settlement company to lower the total amount you owe is a worthwhile option. Century Support Services specializes in this area. We help you put monthly payments into a savings account instead of paying creditors. When you have enough in savings, you settle with your creditors using a lump sum payment. Our clients have more debt than they can afford to pay and don’t qualify for consolidation loans. Credit card balances can be reduced by up to half, and there’s no upfront cost to participate in the program.

Creating a Detailed Debt Payoff Plan

You’ve analyzed your finances and picked a strategy. Now’s the time to put the plan into action so you can start seeing results:

• Be Realistic – Don’t promise to put 90% of your paycheck toward debt if it means you can’t buy groceries. Allocate a specific, consistent amount to debt repayment every single month. Treat this payment like a non-negotiable bill, just like your rent or mortgage.
• Save Some Money – It’s hard to save money when you’re already in debt, but it should still be a priority to pay yourself a little each month. When you do, it can prevent you from having to use credit cards again if your car breaks down or a medical expense pops up.
• Stick to Your Method – Whether you choose snowball, avalanche, or debt settlement, stick to the path you choose and consider automated payments to stay honest. Even debt settlement is an at-will program that you can quit at any time. However, clients who stay with the program until the end get the best results.

Tracking Progress and Staying Motivated

It’s easier to stay with a debt payoff plan when you see progress. Don’t skip this step. Using a creative, visual reminder of how you’re doing is an excellent strategy. Try setting small goals to celebrate along the way. Use a chart to color in as you pay down debt. Lean on a family member or friend for support and to be your cheerleader. Also, remember that life changes, and you might have to adjust the plan periodically. Don’t let this discourage you. Keep moving forward and don’t consider this a sign of defeat.

Need Help Putting a Plan Into Action?

Century Support Services has helped over 300,000 clients settle more than $2 billion in debt through successful accelerated debt payoff plans. If you’ve tried tackling your financial situation through budgeting and strict payments but have taken on more debt than you can handle, consider debt settlement. Contact us today to speak with a Certified Debt Specialist during a free consultation. We’ll assess your financial situation and let you know if you qualify for our program.