Debt Repayment Plan

A debt repayment plan can be different than a repayment program because a plan is a "just on paper" outline of what can be done, while a program can be the actual implementation of certain actions. Many Americans have used a repayment program, offered by many credit counseling services to bring down or eliminate unsecured credit money, typically credit card accounts. But to the surprise of many, using a credit card repayment program can actually heavily damage one's credit score. So while all debt is ever increasingly choking the lifeblood out of many families financial stability, some have chosen to construct a repayment plan and implement its details on their own. There are plenty of resources to help an individual or a family to get their debt under control, but here are a number of ideas that are generally accepted.

Since about seventy percent of all Americans are living pay check to pay check, the assumption that there is little savings in most households can be made. This means that there are precious little cash resources to support a t repayment plan. So the beginning initiatives of a debt repayment plan will be for a person or family to look around and assess property. Look at all the objects that have been purchased over the years. Collecting dust and maybe even a little rust, they are stuffed into closets, cram attics and overpopulate garages. Come on, be honest, who really needs a sixty inch television or surround sound system and twenty pairs of shoes? A designer dress or knockoff-who is going to really care in ten years?

So give each thing a kiss if you desire and sell all on EBay or at a garage sale or auction. Jewelry, boats, cars, Jet Skis, snowmobiles, hobby stuff, golf clubs; okay the point has been made. The days of excess are over! Gather all the cash, no matter how big or small and put in one of two places: on the highest interest rate credit account or on the smallest account in terms of debt size. Here are the differences: putting the money on the highest account will save the consumer some interest money. Overall, concentrating on that account and getting that one paid off is a huge advantage that can pay off in later stages of the debt repayment plan implementation. But working on a huge mountain and chipping away at the loan little by little can really work on one's head. The journey can be tedious and discouraging and could lead to giving up.

So if a person has the tenaciousness of a mongoose, the advice is to put the money on that high interest card. But if the consumer is prone to working off emotion and can get excited or discouraged easily, the advice is to pay off the account with the lowest amount of credit obligation first. On that day when a person sends in the last payment on that first account that has basically been sitting and simmering for months or years, sunlight comes in the front window and all humanity is singing "It's a Small World" and now there is momentum going forward to pay the next lowest obligated account. But, and this is a very big caveat, take every cent one used to pay on the first account and apply it to the next one. So the idea is that a person ends up not only paying the regular monthly payment, but the additional cash is now also applied, and that is the secret to any debt repayment plan or program.

A debt repayment plan is crafted in such as way as to take advantage of every penny available in a personal budget for paring down debt. Therefore, the most painful part of the debt repayment plan is when the consumer honestly looks at and readjusts the expense ledger. There are, of course, certain fixed expenses such as a car payment, phone bill, some utilities, a student loan, a mortgage and other examples. But there are those other really "slippery as mercury" expenses that each of us can control with discipline. Food expenses, both grocery and dining occasions can be reduced. Using coupons and shopping at ultra discount places where one has to even bag his own groceries are a good start. Brown bagging and only going out on a very special occasion is another.

The choices for those steeped in high debt are limited. Number one would be to keep paying the same old minimum payments and by the time pigs fly it will all be paid off. Number two would be to declare bankruptcy and literally trash one's credit scores for the next ten years. Number three would be to employ a credit counseling service to assist in getting rid of unsecured loan obligations. But the best way and the most sensible way is to develop a debt repayment plan like the one outlined here, tightening your belt as tight as can be tolerated, recognizing the process will be a marathon and beginning the trek to financial freedom.

A final note of caution for families about to embark on such a debt repayment plan journey. All of the cards have to be laid on the table for the children to buy into it. That means that for teens and preteens and those older who are still living at home, there must be a full disclosure of income, bills and expenses and a new budget that everyone will help form. Children who feel like they are an intimate part of the complete process will actually be more respectful of the budget than adults often prove to be. This crisis would also be an excellent time to bring God in as a partner on life decisions. "Humble yourselves therefore under the mighty hand of God that he may exalt you in due time: casting all your care upon Him for he careth for you." (I Peter 5:6, 7)

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