What’s Your Debt Free Plan? Get Organized!

What is your debt doing to you?

Photo Credit: banspy

So it’s 2011 and you have decided to get out of debt. What next?

Getting out of debt can be a very overwhelming undertaking especially when you have no idea where you actually stand. The truth, although sometimes ugly, shall set you free. Too many people — my former self included — simply avoid the truth and walk around ignoring the reality of their financial situations.

I’ll just say what you probably already know. Ignoring reality doesn’t make it any less real and denial does more to hurt you than to help you.

Once you’ve decided that your debt load is too depressing to carry, it’s time to find out the specifics of each and every debt you own. It’s time to provide yourself with a crystal clear picture of exactly how big (or small) that monster really is. Doing so (although often hard to accept), will give you the information you need to formulate a debt free plan that works for you.

Becoming debt free isn’t easy, but it’s much easier when you know where you are, where you are going, how you will get there, and how long it might take.

Here are the steps you will need to take in order to organize your debts to maximize your plan:

How much do you owe? – You should know the total amount owed, the minimum monthly payment amount, the interest rate in which you are being charged, and how long it will take you to pay it off if you only make the minimum payments. Do this for every debt you own — no exceptions!

Prioritize your debt - There are many ways you can do this. I used Dave Ramsey’s debt snowball method (from his best selling book The Total Money Makeover), but there are other equally effective ways to achieve the same result. I am currently reading Debt Free for Life by David Bach and I have to say, I am pretty impressed with his system. He calls it the DOLP system, or DOLPing your debt. DOLP stands for Done On Last Payment — meaning when you pay it off you are DONE — get rid of it for good baby! Both systems have you focus on paying extra on the next debt on your list rather than more than one at a time. Either method you choose is completely up to you, but the important thing is that you make it happen, on paper and with purpose. You want to get out of debt right?

Create a filing system – In Debt Free for Life, David Bach suggests that you do this and I must say, I wish I would have done so myself. We were definitely more organized in every other way but I can see real value in having folders specifically for each debt. Bach suggests that you write the balance in bold letters on the front of each debt folder. Each month you will cross out the old amount owed and write the new amount. Seeing your debt dwindle before your very eyes is very powerful and extremely motivating! I love motivation because we all need it! Some people, even those smothered by debt, are very organized in that way and have meticulously filed everything for years. I, however, am not that person but it’s not too late to start. Whether you are in debt or not, filing important papers and documents is the smart thing to do. A 2011 resolution? I think I just made it one. :D

Now that you have figured out exactly how much you owe, prioritized it, and organized it in a way that will help you make this hard, but worthy, debt free journey a little bit easier. You are a step ahead of the rest and the first step is often the hardest. Congratulations!

Now it’s time to put your debt free plan into action. Run as fast as you can forward and don’t look back and debt freedom will be yours!

If you haven’t yet decided to rid yourself of the single most destructive force in your financial life…perhaps it’s finally time you did.

  • How has your debt hindered your financial progress?
  • What could you achieve without it in your life?
  • What are you going to do about it in 2011?

12 Steps to Debt Freedom! Declare your future as YOURS! Take the plunge!


About Brad Chaffee

8 Responses to “What’s Your Debt Free Plan? Get Organized!”

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  1. I’m using Evernote to handle the majority of my finances, in conjunction with Google Docs and Google Calendar. That way I can access all of my information from just about anywhere. Looking forward to kicking debt’s butt!

  2. Penny says:

    My favorite thing about reading your blog is that you aren’t full force only one way works! I’ve never found one size fits all works for anybody. Make a plan and go with it is the name of the game. Thanks again for another great read.

    • Brad Chaffee says:

      Yeah there are many different ways to skin a cat, and my main concern isn’t that people get out of debt the way I did — but that they get out of debt! I do however hope people avoid the costly methods of becoming debt free like debt consolidation and other do-it-for-you financial services. Those methods are like losing weight by taking a pill — the results are rarely long-lasting. Other than that, paying down debt has many different paths. Some work better for others but the end result is always the same. :D

      Thanks for reading Enemy of Debt! Have a great 2011! Cheers! :)

  3. The maze to get out of debt seems to be getting harder for a lot of people. These are some great tips and I would add that there needs to be a larger focus on the mental side of how money works.

    I’m afraid that people are going to start getting budgeting and living within their means confused with sacrifice.

    Having a budget and living within your means is good sound financial advice. Yes there is sacrifice at the beginning, but no one can sacrifice forever.

    Debt free isn’t just about not having anymore debt. Its about total freedom of choice. I’ve gone full circle from no debt to massive debt to no debt.

    Now with no debt and a lot of money I find myself sometimes wanting to hold on to too much money. This is not good either.

    Money needs to be used for:
    *Saving
    *Investing
    *Family
    *Charity
    *Spending on necessities
    *Spending on having fun
    *Wasted on stupid stuff
    *And some other things

    Brad – great work!

    • Brad Chaffee says:

      Absolutely Steve! Great comment. Becoming debt free involves many components which include but aren’t limited too sacrifice, determination, courage, will power, team work, and contentment! Each one handles a different aspect of the journey! :D

  4. Michal says:

    Great suggestions! I always find that staying disciplined is hard, but posts like this definitely help me stay motivated. Thanks! :)

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