Getting out of debt … with a plan

Today’s post is about a reader’s debt and her plan to eliminate them. Also, don’t forget to read about my wonderful $38,000 student loan plan and what I’m doing to aggressively get rid of them.

It’s twice as hard getting out of debt without a plan than with one. So do yourself a favour and have a plan!

  1. List all of your debts

  2. Prioritize your debts (whether you want to tackle the highest interest rate first or lowest balance first, its up to you)

  3. Set your “Debt Free Date” and find out what your payment(s) would be

  4. Find a way to fit this into your budget (or you may have to adjust your date). You may have to make more money in order to do this if you are seriously committed to this date.

  5. Pay off your debt!

A lot of people just pay what they can afford to on their debt without ever knowing when it will be paid off (and if you’re only making the minimum payment it could be 10 years or more!) talk about discouraging! If you plan for particular day to be debt free you are more likely to work harder to get your debt paid off by that date.

How can you find out when you will be debt free? You can use an online calculator there’s a few available that can be found with a quick search.

For myself, I have just over $6K in debt at this moment and I would like to be debt free by the end of the year (11 months). According to the calculator I used it would take me $596.34 per month to pay off my debt in 11 months.


The online calculator I used calculated the payments to each card based on the avalanche method (highest interest rate first) and the minimum payment on the other balance(s). Whether you choose the avalanche or snowball (lowest balance method), be sure to make at least the minimum payment(s) on the debt that you’re not focusing on first (remember the list of priority in step 2) so that your credit history doesn’t take a beating.

Look at your budget

You then look at your budget and see if that amount works in your current budget. However, a word of caution … if you are looking to see if you have that amount left over in your budget every month, you may find that you don’t have that amount. That doesn’t mean it cannot be done.

What I do is that I take my income and subtract my fixed expenses, savings, and debt repayment BEFORE I look to see what’s left over to spend. I’m leaving myself about $300 a paycheque for my variable spending. That’s what’s left over after I take off all of my above expenditures. That may be a very low number for a lot of you. You have to look at your individual spending, BUT, I again caution you that if you don’t even try to live on less, you may never get out of debt or once you are out you will go back in. If you never control your spending and have a plan you may always stay in debt.

Here’s a really simplistic example: $2500 income – $1,000 (fixed expenses rent and bills) – $250 savings – $596.34 (debt repayment) = $653.66 left over for your variable costs per month. If you know 100% that this amount is not doable, then you will probably need to adjust your debt free date. Although, the longer you prolong debt repayment, the more likely you will be a victim of debt fatigue and will go on a spending spree. So, keep the date tight.

You can also make more money, but if the debt repayment amount is solely or mostly dependant on this extra income, you may still need to do some adjustments. Most of the time, extra money is variable and can change from month to month. I’m not saying not to make extra money if you can, it will just mean that your date free date can be sooner than you had originally anticipated, and that would be a welcome bonus indeed.

Getting out of debt isn’t easy, I’m still working on it, but with a plan, hard work and dedication, you too can have your debt free day!

Morgaine @ Morgaine and Money. I’m 32 years old, been blogging about personal finance since 2010 (with some hiatuses) as inspired by Gail Vaz-Oxlade and other pf bloggers to get out of debt and transform myself from spender to saver. Currently turning my $21K of debt into $21K of savings and hoping to buy a house in the near future. Follow me at and on twitter @morgainemoney

What is your plan to get out of debt? What is your monthly amount that you are paying towards debt?



072047 02951