Being debt free is an admirable goal and one many people hope to achieve. Whether you have credit card debt, student loan debt, car loan debt or other obligations, paying off the last of your debt can be one of your greatest financial achievements. If you set a goal for yourself to pay off debt within 12 months, you can get there even faster.
Determine the total amount needed to pay off all your debt. You can do this by adding up the balances owed on your accounts and also listing the interest rate. Don't forget that when you make a payment, it must go to interest first. Add up the amount you owe, determine the annual interest on that amount and add that in too, and then arrive at the total amount of money you will need to pay off all your debt.
Divide the total amount of money you need to pay off by 12 so you can find out how much you need to pay each month. You will need to pay at least that much in order to get your debt paid off by the end of the 12 month period.
Compare this number to your income and set up a budget. If you make more than the amount you have to pay off to be debt free in 12 months, then you may be able to easily achieve your goal. Set up a budget, factoring in paying that amount each month, and be sure you can pay that amount and still afford other necessities such as rent and food. You can cut out unnecessary expenses, such as cable TV packages and dining out, in order to fit your debt payment into your budget.
Increase your income if necessary. If your debt number that you need to pay off in 12 months was $500 a month and you only have $500 per month to spend, you may not be able to achieve your goal (since you can't go without food and other such necessities of life). If you need to have more money than you bring in to pay off the debt, then consider getting a part time job or looking for other sources of income, such as overtime. There are many different jobs you can do around your regular work schedule- you could deliver papers or pizzas, or work at a shipping company packing boxes at night for example.
Automate the process. Once you know you can make enough money to make the debt payment necessary each month, set up the payments to deduct automatically. That way you will be sure they are getting where they need to go and you won't be tempted to spend the money on something else.
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