Debt Action Plan

Debt action plan – Start making your goals a reality

Once you’re ready to start tackling your debt and have a clear sense of how much you owe, your next step is to make an action plan. Use this worksheet to think about your debt repayment goals, the steps you can take now, and the help you will need along the way.

Consider using the snowball or avalanche approach.

“Snowball” method

Focus on the smallest debt first. After you have made all of your minimum payments, increase your payment on the smallest debt. After it’s paid off, add that amount to your payment on the next smallest debt. Seeing the progress of paying off your small debts can be very motivating. A disadvantage of this method is if your larger debts have higher interest rates and fees you might pay more overall if you pay off the smaller ones first.

“Avalanche” method

Focus on the debt with the highest interest rate first. After you’ve made all your minimum payments, increase your payment on the debt that has the highest interest rate. After it’s paid off, add that amount to your payment on the next highest-rate debt. An advantage of this method is that you get rid of the most expensive debt first. By paying off the debts that charge you the highest interest and fees, your money could go further. A disadvantage is that it can be harder to feel like you’re making progress quickly