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Are you doing these 6 steps to successfully pay off your debt?

Posted: 5:23 AM, Mar 03, 2020
Updated: 2020-03-03 15:09:09-05
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FARMINGTON HILLS, Mich. (WXYZ) — March is Credit Education Month. Did you know 78 percent of Americans are living paycheck-to-paycheck?

When you’re talking about debt, millions of people are dealing with it.

Mark Powell of Waterford is really focused on paying off his college student loans, but that’s not all.

“The credit card, the payment is pretty high,” he said.

Tamika Brooks of Detroit is trying to save money to buy a house in a year. What’s her biggest concern?

“Credit cards,” she replied.

Robert Adams of Detroit is retired, but he is optimistic he’ll pay off his plastic.

“I could pay that off…in about six months time,” he answered when asked how soon he could tackle his debt.

GreenPath Financial experts said 41 percent of the country is dealing with revolving credit card debt – the amount left over when we can’t pay off our credit debt at the end of each month.

Kristen Holt is the CEO of GreenPath Financial Wellness – a national non-profit credit counseling organization that’s based in Farmington Hills.

HERE ARE SIX STEPS GREENPATH SUGGESTS FOR PAYING OFF DEBT:

1. Write down your why

Think about what will inspire you to reach your goal. You may even find multiple reasons to motivate you.

“You might want to reduce stress. You might want to be able to spend more time with your family,” said Holt.

Maybe you want to save for a big trip or for a comfortable retirement. Whatever the reason is, write it down.

2. Set specific targets & deadlines

“Like I want to save $5,000.00 in the next year to go on vacation,” Holt explained as an example.

You’re setting a specific monetary amount and a deadline on the calendar to help reach your end goal. Now it’s time to get down to the nitty-gritty.

3. Set Mini Goals

It’s important to set smaller benchmarks so your overall goal is not so overwhelming. It’s about climbing that mountain one step at a time.

“$5,000 in a year is about $20 a day or $100 a week or $400 a month,” said Holt.

Every little bit adds up.

4. Evaluate your monthly spending

Holt said you need to know where your money is going to make this process work.

So, list how much money is coming in to your household and how much money is going out.

Also, you need to note how much you’re charging. Apps can be helpful with this process.

5. Automate your savings

Holt said think of automating your savings as paying yourself first.

“If you get paid every week, you want to set up your direct deposit on your paycheck to automatically put that $100 in your savings account or you can also just do it directly with your bank where you set up an automatic recurring transfer so that money’s gone before you have a chance to spend it,” said Holt.

So, it’s about setting it and forgetting it. On that note, we get to number six on our list.

6. Set automatic payments towards your debt

Setting automatic payments to your credit cards or other debts when you get paid makes it easy.

You know you can do that with your car payment or your mortgage or your student loans.

Some lenders will reduce your interest rate if you sign up for automatic payments.

If you’re struggling to pay only the minimum payments on your credit cards, you may want to consider a debt management plan.

GreenPath can renegotiate your interest rates to be much lower, and that should help you pay off your debt faster.

If you think you need some help walking your through the process, you can call GreenPath financial for a free consultation.

Call (866)648-8122 or visit GreenPath's website.

Counseling hours are:

  • Monday-Thursday 8am-9:40pm ET
  • Friday 8am-6:40pm ET
  • Saturday 9am-1:40 ET

Counselors typically don’t begin counseling 20 minutes prior to closing.

Holt said about 200,000 people call GreenPath each year for a free consultation. About 50,000 decide to try a debt management plan.

Did you make paying off debt your New Year’s Resolution? If so, how are you doing on reaching your goal? Email Alicia Smith to share: Alicia.smith@wxyz.com