Of the many options available for eliminating #Debt, our most effective option is for clients to use a Target. Setting a Priority Payment Plan assures that the more critical secured debts are paid first. Secured debts, those in the Center of the Target, are those which could result in eviction, repossession, garnishments, and warrants for debts controlled by Federal Agencies, or Federal Law:
1. Pay all #Secured Debts first.
- Home mortgage/Rent
- Child/Spousal Support
- Student Loan (Call us about new services we offer for #StudentLoans)
- Income Tax Lien
- Utilities (Check for special programs and services for hardship)
Knowing which bills are most critical help you set priorities for your spending patterns and bring you to a real world perspective where you maintain financial control. Design your Target from the Center outward with the inner circle being Secured Debts, then Credit Cards the next circle, then Medical, and finally, Personal loans being the outer rim. These are set in priority based on legal repercussions such as eviction, garnishments, repossessions, and contempt of court in a case of withholding child support.
2. Pay unsecured debts with remaining funds.
- Credit Cards
- Department Stores
- Small Finance Companies
Once all the Secured Debts are accounted for take inventory of all #Unsecured Debt to be eliminated: Credit Cards, Department stores, Discount stores, (Sears, JC Penney, WalMart); #Medical or hospital bills; Personal loans to family or friends. Firehose every dollar you can earn toward your payments on all debts as required, from the smallest balance on the outer rim to the highest balance at the center of the Target.
3. Pay Medical and Personal debts with whatever remains.
- Hospital/Physician Bills
- Family and Friends
As you pay one debt off, DO NOT DECREASE THE TOTAL MONTHLY PAYMENT. Simply roll the eliminated payment onto the next target realm. Continue this process over the months until all the payment is concentrated on the final remaining balance.
Ideally, the inner circle contains your home, car, and secured obligations. The most preferred option is to pay the smaller balances first. Since they will pay off more quickly you can erase the outer circles of the Target. This provides a consistent sense of accomplishment.
Another option is to pay the card with the highest finance charge first, paying the creditor the least interest necessary. However, we have found that the encouragement from quick pay offs of smaller balances adds momentum to the client’s debt free concept more than paying down the highest interest rate.
How LONG do you want to be in Debt? “Vacation” from payments and reduced minimum payments are scams that credit card companies use to extend your repayment time. As your balances decrease each month they lower your minimum payment. DO NOT LOWER your payment. If anything, increase it or at least pay extra when you can. Hold the line at the payment YOU agreed to when you designed your plan. This way you get compound interest removed from the accounts quickly, and eliminate one more debt from the Target!
Ideally, you will want to pay all these debts and clear your credit report. Should you experience a #Financial Crisis, our Advisors can assist you. With your signed permission, we will contact your creditors for a temporary Hardship. We help you build a bridge of communication and reduced payment plans until you are able to checkout of “Hardship Hotel.” That does NOT have to be a permanent address for you!
Again, we recommend strongly that you set your Target toward a specific GPS for Goal-Powered-Spending. Decide on a goal you have always wanted. Set a picture of that goal beside your Target Plan. Assign “Every Dollar ON Purpose With Purpose.” You can’t imagine the satisfaction of finally being in control of your money and Financial Goals.