free debt elimination plan

Free Debt Elimination Plan if You Owe Less than $50,000

Nearly the entire population of the United State of America has some form of debt. Some have what’s called “good debt”, which are things that will eventually grow in value. Taking out a mortgage on a home can be considered good debt, as the home will likely appreciate in value over time. Student loans can even be “good debt” if they earn you the ability to make more money.

However, a vast majority of debt is “bad debt.” Car loans, credit cards, and personal loans typically fall into this category. The money in these groups rarely ever improves a person’s earning capacity or gains value. More often than not, these debts grow worse and worse over time due to interest rates.

Free Debt Elimination Plan

If you’re $50,000 in “bad debt” or less, you can and should create a debt elimination plan as quickly as possible without putting yourself or your family in danger of losing basic necessities. You’ll need to take an inventory of your debts, do your research, build a budget, and then create a payment plan. It sounds daunting, but it only requires a few simple steps and a whole lot of dedication.

Debt Inventory

This is by far the hardest step. It’s not exactly the hardest physical step to take, but it’s emotionally exhausting. It’s also time-consuming if you’ve been avoiding your debts for any length of time. Set aside at least 3 hours to complete this task. And when you do your inventory, include everything!

Debt Starter List

  • House Note
  • Student Loans
  • Medical Bills
  • Major Credit Cards
  • Store Credit Cards
  • Overdue Bills
  • Personal Loans
  • Child Support

Write down the exact amount you currently owe for each debt on a piece of paper or in a spreadsheet. The next common suggestion is to add up everything you owe to get one, sum total of debt. This is not beneficial. Knowing the total amount is not only deflating, it’s unnecessary. Instead, begin sifting through your list to determine the most damaging debts in order of most to least.

What are damaging debts?
The most damaging debts are those that most immediately threaten your ability to live your life. These could be past-due electricity bills, delinquent child support payments, or a late mortgage. Think about which of your debts would actually keep you from earning enough money to pay off other debts. If several of these debts are of the same importance, don’t concern yourself too much with the order as you do the placement in the overall list. Just move these debts to the top of the list.

Sort by Interest Rate
Next, write the rest of the debts on your list in order from highest interest rate to lowest. This will take some research. You may need to call the companies holding your debt or research your accounts online. Those debts with the highest interest rate should be highest on your list. While paying off smaller balances can give you a boost of confidence, financially it is a mistake to put off paying high interest bills any longer than is absolutely necessary.

Finally, include the monthly due date written next to each debt. Knowing when things are due will be helpful later when we plot out a budget.

A side note: As you’re making this list, do not focus any attention on how you’re going to pay these bills. Instead, dedicate yourself to making the most accurate, comprehensive list possible.
With your inventory finished from most dyer to least important, it’s time to make phone calls.

Do Your Research

Find the phone numbers associated with every debt you owe. Each item on your list should have a phone number. Then, starting at the top, begin making calls.

Taking each individual bill into consideration, begin by explaining your situation. You might begin by saying something like, “I am attempting to take care of my debts as responsibly as possible and I am gathering information in order to get my ducks in a row.”

Then, it’s time to ask questions. Ask if the lender would consider waiving any or all late fees. Almost 90% of people report that lenders will waive at least one late fee.

Next, if applicable, ask if the lender would consider lowering your interest rate. You could ask, “I’ve seen cards with interest rates as low as 15% but mine is 20%. Would you be willing to match it?”

Ask if you can change your due date. Having all of your bills due shortly after you receive paychecks can you stay on top of payments. For example, if you get paid on the first and fifteenth, try and set as many of your bills’ due dates as possible around the fifth and twentieth of the month. This won’t be possible with some bills, but many companies will work with you.

Finally, you can ask directly if there are any other ways the lender can help you while you pay down your debt. Often times, companies are interested in incentivizing you to pay off your debt in some unique ways for customers who are motivated. Some money is better than no money for them.

As you make these phone calls, be kind. Speak clearly and calmly. Take notes. If the service representative turns down your request, it’s ok to ask for a supervisor. Being nice and persistent goes a long way. Even if the lender isn’t willing to make any exceptions for you, you know you’re not leaving any money on the table before you begin creating a repayment plan.

As soon as you know exactly the list of debts you owe and the order in which they most need your attention, it’s time to plot out your monthly budget.

Create a Monthly Budget

On a separate spreadsheet or piece of paper, write out all of your monthly expenses. Listing your debts should be easy, as you’ve already got them written out in a specific order. But this list should also include rent, utilities, gas, cell phone, home Internet, food, and entertainment.

Some of these bills fluctuate which can make them difficult to budget. Take some time to look back at bank accounts and credit card statements to come up with a fair average minus 10%. If you have been spending about $400/month on food, lower that number by 10% to $360/month. Then find ways to stay within that budget like bringing your lunch to work and limiting dinners to groceries and inexpensive meals out.

Then figure the minimum payment for each of your debts into your monthly budget and add 10%. If you’re unable to add that much to every debt, add it to as many of the most damaging and highest interest debts. Remember, this should be in the monthly budget now (not optional if money is leftover at the end of the month).

Monthly Budget Tips
Move as many payment due dates as possible to the 5th day after you receive a paycheck. If you’re paid the 1st, set your due date and auto pay for the 6th.
Call your cell phone provider and find out if they are running any special plans or discounts.
Find appliances and other electronic devices in your home that could be unplugged while not in use to save money on electric.
Call your home Internet provider to determine if there might be a better plan available.
Give thought to how much you are driving and to where. If it’s possible, carpool or bike.

As you write out these numbers, come up with a total monthly expense number and compare it to what you’re earning monthly. Do you need to find places to reduce your expenses? Do you need to find a second job, at least temporarily, to hit your monthly target? Again, be honest with yourself as you prepare your budget. There is no point in doing any of these exercises if you cannot get everything written out plainly in black and white.

A note about AutoPay: The more of these bills that can be automatically deducted from your checking or savings account, the less likely you are to spend that money before you’re able to pay your bill.

Create a Payment Plan

Getting out of $50,000 in debt will not happen overnight, but there are specific methods to slowly chip away at it since you now have your monthly expenses and overall debts written out and clear.

First, take a look at the most damaging debt or the one with the highest interest rate (whichever is at the top of your debt list). If it’s a damaging debt, it will likely be a past-due mortgage. If it’s a high interest rate, it will likely be a credit card or a personal loan. Whatever debt is at the top of your list, this should be the debt you pay off first.

If you can, pay the minimum payment plus 10% twice each month (or as close to it as possible) on this debt only. Paying attention to your budget, if you have money leftover in a category (say, the food category), apply that money to this debt as well, even if it’s only $10. If you take on a second job or side gig, apply all of that money to this debt.

As soon as that first debt is completely paid off, begin taking the money you were spending and add that amount to the minimum amount for the next highest interest debt. Here’s how it would break down:

1st Debt: If the monthly minimum plus 10% is $75, pay $150/month until paid off.
2nd Debt: If the monthly minimum plus 10 % is $80, pay $80 plus $150 a month until paid off.
3rd Debt: Continue paying the monthly minimum + 10% until the Second Highest Interest Debt is paid and apply the money from Highest and Second Highest to this debt.

And so on…

This is called the Snowball method and as you build momentum, you’ll watch debt disappear faster and faster if you stick with it.

The key to all of this is to remain consistent. It’s not enough to say that you stuck to your budget for one month and then “fell off the wagon.” In order to see real change, you should be incredibly consistent, conscious, and (let’s face it) frugal for at least a year. It is absolutely possible to pay off $50,000 in a year using these methods. Remember you goals, keep your budget visible, and don’t give up!

Disclaimer: Content found on has been created to be used for informational purposes only and help readers achieve a basic understanding of their finances and financial options. The content is not intended to replace or usurp financial advice from professional accountants, CPAs, etc. If you you’re seeking financial advice, always present any questions you may have regarding your finances to a professional. Never disregard professional advice because of something you read on the internet.

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.