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Financial Organization Tip: Creating a Debt Paydown Plan in 5 Easy Steps

The new year is here, and there’s no better time to tackle outstanding debts. At AFP, we believe a clear plan can help you turn financial stress into financial success. Here’s how you can create a debt paydown plan that works:

Step 1: List Your Debts

Start by laying it all out: balances, monthly payments, and interest rates for every loan and credit card. Having all the details in one place helps you stay organized and track progress.

Step 2: Set Priorities

Not all debts are created equal! Decide where to focus:

  • High-interest debt to save the most money over time.
  • Smaller balances to gain quick wins and keep momentum.
  • Debts causing the most stress (hello, giant student loan) to ease your peace of mind.

Step 3: Get on a Spending Plan 

Take a closer look at where your money’s going (quick tutorial here). By trimming discretionary expenses, you can free up extra cash to pay down debt faster.

Step 4: Choose Your Strategy

Make debt repayment more efficient by using one of these popular approaches:

  • Debt Snowball: Pay off the smallest balance first, then roll the payment into the next debt.
  • Debt Avalanche: Focus on the highest interest rate first for maximum savings.
  • Debt Snowflake: Add any small savings (like from coupons or cashback rewards) toward your debts, it adds up!

Step 5: Explore Tools and Apps

Debt payoff apps, consolidation loans, or balance transfer credit cards with low or 0% introductory APRs can give you a helpful boost.

Why It Matters

Starting 2025 with a debt paydown plan can not only reduce financial stress but also build better habits for the future and improve credit worthiness. Whether it’s creating a budget or using one of the repayment methods, every small step gets you closer to financial freedom.

At AFP, we’re here to help you organize the details so you can focus on the bigger picture. Ready to start? Learn more about our services at Assurance Family Partners.

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