Payoff Debt One Debt at a Time

by : Rayven Perkins

If you are a stay at home mom in debt, and have multiple creditors, you may find yourself making many minimum payments each month just to stay afloat. Statistics show that an American family's credit card debt of $10,000 will take over 30 years to pay off if only minimum payments are made.

That is an extreme example, but it is clear that only making minimum payments will significantly increase your debt due to accumulating interest charges. Being late only once can hike your interest rates even more, and lead to excessive fees and other charges.

Lenders offer the quick fix of debt consolidation, home equity loans and other programs that ultimately result in still more debt, and may jeopardize your entire future, causing you to rethink the financial aspect of staying a stay at home mom.

A plan is needed to directly address your debt, and offer a workable solution to ultimately get you out of debt once and for all. By carefully examining each penny you spend, and cutting out unnecessary expenditures, you can start saving money and reducing your debt at a sensible and much quicker pace.

First you need to track all of your daily expenses and find out where your money goes. Chances are you will find a lot of small, seemingly negligible purchases that seem inconsequential taken one by one, but add up to a significant financial drain on a monthly basis. By cutting out such excessive spending and putting that money aside, you should have a respectable amount saved at the end of each month.

Now you need to look at your various debts. Find the one with the lowest total remaining balance, and see what your monthly minimum payment is. If you have two that are nearly identical amounts, pick the one with the higher interest rate.

Suppose you owe Buy it Now Furniture $450, and your monthly minimum payment is $22. You have managed to save $60 by the end of the month, so you make your other payments as usual but you add the $60 to your normal payment of $22 and send $82 to Buy it Now Furniture.

At this rate you will pay off your debt in about six months, rather than years. Now you have a surplus amount of money each month of $82. Move on to your next lowest total debt, owed to Charge it Up Credit Company, where your balance is $1500 and your minimum payment is $45.

Add the $82 to the $45. Now you are making payments totaling $127, and you will see that balance drop rapidly as well. Once you have paid off Charge it Up Credit Company, you know what to do next. Add the $127 to the minimum payment on your next debt, and keep repeating the cycle.

This does take time, but you are paying off your complete debt to one creditor after another, and it is certainly not going to take as long as it would if you continued to make minimum payments alone.

Eventually you will become completely debt-free stay at home mom and it all started with a few less cups of coffee, a few more home-cooked meals instead of take-out, and $60 a month!