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Do-it-yourself Debt Management
By Dave Galahad
Debt Management is now made easier than ever in big part because of competition between financial institutions. Many checking accounts offer no minimum balance and free online bill pay, free transfer of funds between accounts, among other features in order to gain new customers and retain current ones.

This is simple to achieve in the following 10 steps. All you have to do is follow a simple plan and monitor it from time to time. Before you know it, you'll be out of completely. You'll pay no credit counseling fees, no management or consolidation fees. This option is a little less stressful because there is only one day per month you have to remember to make a payment; and depending on your consolidation method, it could bring you lower interest rates so you can pay off debts quicker.

1. Make a list of all your bad debts: include "creditor" "amount owed" "minimum monthly payment" and "number of months to pay off" (divide the total owed by the minimum payment).

2. Rank each based on the number of months to payoff. #1 will be that with the least amount of months to payoff. #2 will be the next lowest number of months to payoff and so on.

3. Evaluate your income and spending habits and come up with an extra $150 to $200 per month.
--Take your lunch - $5/weekday to eat out adds up to $100/month.
--Coffee - drink it for free at the office.
--Specialty coffee drinks - $4/day for a coffee drink for a month adds up to $80/month.
--Tobacco - Cigarettes cost approximately $23/carton. If you smoke 2 packs a day, that carton will last you 5 days. Your monthly cost of this habit is $138. Quitting would be best but if that's not an option, cutting back will save you money on cost of cigarettes which can be put toward your plan.
--Check your other fixed monthly expenses to see if you can reduce them further and put the extra money toward paying off debts.
--Use these things for rewards for reaching milestones in your management plan instead of crutches to get you through the day. Pay off your debts with the extra money.

4. Open a separate checking account from your personal account(s) - needs to have free online bill pay, no minimum balance, and be able to accept funds transfers from your personal checking account. If you can get an interest bearing account with the above-mentioned features, that would be outstanding.

5. Determine the minimum amount you need to pay on each debt.

6. Set up an account transfer from your personal checking account to your bill pay account for the amount you came up with in step #5.

7. Set up your automatic bill pay for each creditor so that the funds leave your bank and arrive at your creditor a few days before the due date. Pay the minimum amount on all the debts numbered 2 through the end of the list.

8. On #1, pay the minimum plus all the extra cash you came up with in step #3.

9. Focus on #2 once #1 is paid off, using all the income you were using to pay on #1.

10. Repeat this process until all the debts on your list has been paid in full. Also, once all the debts are paid, leave the monthly transfer in place and make the money you've saved to this point work for you instead of the other way around.

The key to this plan is to not take on any additional bad debt, remain laser focused on paying off debts and using extra income you can come up with for the cause. At least once a month you should monitor your plan to make sure the payments are being made on time, and everything else is going according to schedule.

Article Source: http://articles-galore.com

Dave Galahad is a freelance writer for ABCMoneySource.com on topics

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