A plan to get out of debt is only as good as your ability to stick with it.
If you’re in debt, you have to get out. The best way to do that is to put together a plan—but remember a plan is only as good as your ability to stick with it. Just like diets, all of them work; the true test is sticking with one. No matter how effective the plan is in theory, if the regimen is outlandish and impractical, you will not stick with it.
When evaluating a get-out-of-debt plan, you should look for one with these characteristics:
- No. 1: It is easy to prepare.
- No. 2: It is simple to understand.
- No. 3: It can be reduced to writing.
- No. 4: Its results can be measured.
- No. 5: It has a specific finish date.
I have developed the Rapid Debt-Repayment Plan, which fits these criteria and consists of four rules. If you will diligently apply these rules to your unsecured debts, you will get out of debt in record time.
1. No More New Debt
Unless you are willing to stop adding to your unsecured debts, you’re really out of luck when it comes to debt-proofing your life. Furthermore, if you don’t stop adding to the problem, you‘ll be like the homeowner with the kitchen fire—except instead of putting out the blaze that’s ready to destroy the entire structure, you’ll be pouring gasoline on it. It might be manageable for a while but you'll be on your way to a full-on raging inferno. The rule is simple: No more unsecured debt.
2. Pay the Same Amount Every Month
Whatever your minimum monthly payment is this month, fix it. That means even if your creditor will accept less next month, you decide that whatever it is this month for each of your unsecured debts, you'll pay that same amount until you are out of debt.
3. Organize Your Debts
Line up your debts according to size, putting the one with the shortest payoff time at the top and the one with the longest term at the bottom.
4. Add Your 1st Payment to the Next
As one debt is paid, take its payment and add it to the payment of the next debt in line. This is where the rapid part of this plan kicks in. With much larger payments going to that second debt each month, it will reach $0 in record time. Then take both the first and second payments and add them to the third debt’s payment until it is paid, continuing until all are paid.
