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Getting out from under the burden of debt By Arnie Norem, Army Community Service Financial Readiness Specialist
I
n debt? Stress no more. With these simple steps from the ACS Financial Readiness Program, you may find yourself out of debt faster than you thought possible.
Develop a plan To begin a recovery plan from debt, you first should develop a workable budget and spending plan. Do what’s necessary to establish a positive monthly cash flow. Prioritize debt repayment — ensure minimum payments are made on all monthly bills, and then apply all remaining available funds to your debt repayment.
Prioritize repayments How can you get rid of your credit card debt? First, gather all your credit card bills together. For each account, write down the total balance, the minimum monthly payment required and the interest rate.
higher interest rates, more of your monthly payments go toward finance charges. Quickly paying off balances on your credit cards or loans with high rates can free up cash to pay other bills. • Pay off cards with the smallest balances first. Paying off cards with small balances gives you extra money to pay on the bigger balances. • Make PowerPayments. Once you pay off a bill, use that monthly amount you were paying and add it to the next highest interest rate card or loan payment on the remaining creditors. For example, let’s say you pay $30 a month to Creditor A. Once it’s paid off, you add $30 more to payment you make for Creditor B. Then when you’ve paid off Creditor B, add Creditor B’s monthly payment,
With a few smart moves and some time, you can make debt just another four-letter word. Getting out debt may be easier than you think. Then look at your debts and set priorities for your repayment. Which debt will you pay first? • Pay high-rate cards or loans first. At 28
Joint Base Lewis-McChord Focus • December 2013
including the $30 from Creditor A’s account, to the payment you make to pay Creditor C amount and so on until all accounts are paid in full.
Stop making new charges These plans only work if you don’t continue to add to your debt load. If you have to, have a “plastic surgery” party. Cut up all your cards, hide them, freeze them in a block of ice or lock them in a drawer. Remember, out of sight, out of mind. A great tool to use is the PowerPay computer program, developed by Utah State University Extension. It calculates the savings made when you make PowerPayments in three scenarios: 1) paying off creditors with the highest interest rates first, 2) paying off creditors with the lowest balances first and 3) paying off creditors with the shortest terms first.
How do you get started? Go online to https://powerpay.org or call Army Community Service (253-967-1453) or the Airman & Family Readiness Center (253-982-2695) to schedule an appointment with a financial counselor or register for an upcoming class. For a list of upcoming classes, visit the Event Calendar at JBLMmwr.com or like us on Facebook at fb.com/JBLMacs.