For many people, reducing debt is the first step toward a sound financial future.

And one of the best ways to reduce debt is to get organized and create a debt-repayment plan – which is exactly what we’ll do in the next 30 minutes.

Remember: you only need 30 minutes for the basic mission. Extended Options are below.
If you’re new, you might like to start here -> 52 Organizing Missions.

Note: If you haven’t already, you may like to first complete Get Organized Mission #12: Organize Your Accounts & Credit Cards.

Disclaimer: This is not financial advice, it’s organizing advice. If you need financial advice, please get yourself off to a financial professional.

Get Organized Mission #50:
Create a Debt Repayment Plan

Step 1: Rank Your Debts By Interest Rate (5 mins)

First, for every loan, credit card, store card and other debt you have, gather together the latest statement or other communication that shows the interest rate you’re paying.

Order your debts by interest rate – for instance, credit cards tend to have higher interest rates than personal loans and mortgages.

Step 2: Calculate Your Minimum Repayment Amount
(5 mins)

Next, let’s work out how much you’re required to repay each month.

Find the minimum monthly repayment amount for each debt, and add all of these minimum payments together.

You now have the total minimum repayment you need to pay each month against your debts.

Step 3: Calculate Your Surplus Repayment Funds
(10 mins)

Next, let’s work out how much you can actually afford to repay each month.

If you have a lot of debt or want to pay off your debts faster, you may choose to make some sacrifices and cut out a few luxuries.

For instance, could you:

• Stop buying things you don’t need or love?
• Borrow books from the library rather than buying them?
• Buy regularly used items in bulk?
• Shop at cheaper stores?
• Walk instead of taking the car?
• Reduce the heating/cooling controls and rug up/dress down instead?
• Choose less expensive entertainment options?
• Cancel little-or-never-used memberships and subscriptions?

Add any savings you’ve decided to make to the amount you’re currently paying each month. This will give you the new amount you can afford to repay against your debts each month.

Now, deduct the total minimum repayment you calculated in Step 2.

That will leave you with the surplus repayment funds available for getting rid of your debts.

Step 4: Create a Debt-Reduction Plan
(10 mins)

Good – now that you know which debts are costing you the most (Step 1), and your surplus repayment funds (Step 3), over and above your minimum repayments (Steps 2), you can allocate your available funds accordingly.

For instance, you might like to allocate your entire surplus funds each month to your highest-interest debt until this is paid off, and then allocate your entire surplus funds to the next-highest-interest debt, and so on.

How you allocate your surplus funds will depend on your overall goals and circumstances.

The important thing is to be organized and strategic in knowing what you need to pay, what you can afford to pay, and how you can allocate your repayments in a smart way.

Get The Worksheet

If you’re a member of the Get Organized Wizard community forums (they’re filled with hundreds of posts and resources), you can download a free Debt Reduction Plan worksheet. Or become a member now (it’s free).

The Debt Reduction Plan and many other financial organizing worksheets are part of the Ultimate To-Do List Pack | Personal Edition, Premium Pack, Complete Suite and Ultimate Pack, and are available to Design Your Life members in your Library Of Resources.

Dos & Don’ts

• Don’t hesitate to seek financial advice if you need it. The worry and sleepless nights are far worse than the pain of making an appointment and creating a plan with a professional. Ask friends for recommendations for a good accountant or financial planner.
• Do be mindful of any penalties that may apply on certain loans for early or late repayments. Again, see a financial professional if in any doubt.

Extended Organizing Mission Options

Want to go beyond this 30-minute organizing mission?

• Investigate the possibility of consolidating your debts into a single, low-interest loan. Talk to your bank manager, accountant or financial professional.
• Complete this mission with older kids who are starting to use loans or credit cards. Show them how to make repayments wisely and avoid penalties, and you’ll set them up for a smart financial future.

Ready, Set, Go!

Remember – move quickly, act fast, don’t overthink.

Start The 30-Minute Timer

Before You Go: Check In!

Please add a comment to say you’ve completed this week’s Get Organized Mission and you’re keeping your commitment.

And see you back here next week!

Organize Money, Home, Life – in Just 30 Minutes a Week

With the 52 Organizing Missions Workbook Pack you’ll simplify, organize and declutter dozens of areas, including:

Household clutter Bag/briefcase/tote Bills Freebies Phone messages Car Happiness Filing system Closet Accounts and credit cards Household notebook Emergency information Kitchen Books CDs DVDs Bedroom Computer Office/home office Bathroom Better relationships Morning routine Night-time routine Chores

Procrastination Self esteem Work productivity Home organization Personal time Stress management Living area Laundry Email Donations Saying ‘no’ Paperwork Diet Exercise Clear surfaces Storage spaces and units Possessions Time management To-do list Home boundaries Garden Personal makeover Negative thinking Kids’ bedrooms

Every workbook includes fully interactive Planning Worksheets, To-Do-Lists, and Success Journals not available elsewhere. Plus there are live accountability and free-download links.
Learn more

[Image: by azrainman]

Related posts:

1. Get Organized Mission #12: Organize Your Accounts & Credit Cards
2. Get Organized Mission #3: Organize Your Bill Payment
3. How to be Organized in 2009: Day 9 – Money & Finance