I struggled for years wondering why I couldn’t get out of debt. Or I would get close to it and it would escape me again. I had read Suze Orman and David Bach’s books. I had watched numerous television shows on debt management, using credit wisely, and good credit versus bad credit. Yet I was still $50,000 in debt. Then I found Dave Ramsey’s Financial Peace University (FPU). From this program I became DEBT FREE. But I won’t focus on the program but on what I discovered about using the program.
I had to develop a 5 step action plan to reach financial freedom. I had goal the overall goal to become debt free but I didn’t have a SMART plan. I needed an action plan that was Specific, Measurable, Achievable, Realistic and Time Bound. I used FPU baby steps to develop my SMART plan.
I applied the SMART action plan for every single debt I had by doing this:
- I first listed each debt by name, current outstanding balance and minimum payment.
- Then I organized debts from smallest to largest debt amounts outstanding.
- Finally I wrote specific statements for each debt that included monthly payments, when I would complete paying off the date with a reasonable or realistic timeframe.
This is an example: I will pay off my Visa card with the balance of $1287 by December 27, 2015 with 4 monthly payments of $321.82.
- S = Specific – Pay off Visa Card
- M = Measurable – Outstanding Credit Card Balance $1287, so you measure the change in this amount.
- A = Achievable – $321.82 – Select a payment amount that makes sense. You can turn off cable but keep basic internet. You need to make necessary budget cuts to come up with as much cash to pay off debts.
- R = Realistic – Pay off only ONE debt at a time. This way I could focus on it and just make minimum payments on other debts.
- T = Time Bound – The deadline of December 27, 2015 with a 4-month time period
As a goal oriented person, this method really worked for me. As I achieved one goal, I would take it off my list and then “snowballed” that payment onto the next debt. This method kept me focused on accomplishing each goal. It also kept me from feeling overwhelmed and focused. This is a very doable method that you should try.