Editorial Policy

Is My Debt Repayment Plan Too Ambitious?

Erica Sandberg

February 8, 2013

QDear Erica,

I saw you on TV and am trying to follow your advice to pay off debt in the new year. My  plan is to be debt free by April 16. That's my last due date for one of my cards. This month I made three payments totaling $1,277, but now I have no money for anything else. I don't know what happened. I don't want to charge more, but I need things like groceries and gas. I get paid the first and the 15th of every month, so I have to wait to get more money to do anything. Any ideas? Feeling pretty discouraged here! — Stephanie

AHi Stephanie,

You know what you need? A cheerleader. Someone to jump up and down when you're running out of steam and shout, “Go Stephanie go — you can do it!”

I'll be that person for you now, but also consider sharing your financial goal with a few close friends or family members. Sometimes an entire squad is necessary to keep your eyes on the prize.Ask Erica

Inspiration aside, I don't want you to starve, so if the only way to pay for necessary food is with your credit card, go for it. Just be mindful of what you spend so you can keep the charges as low as possible. A quick Internet search under “cheap meals” pulls up an astonishing number of ideas for low-cost recipes. Coupons can help, too, as long as they're for items you'd normally buy.

As for the gas issue, can you carpool, take public transportation, bike or even walk to where you need to go? Explore every option. In the event you can't, then, yes, using the card before your paycheck arrives is the right thing to do.

Clearly I'm all for stretching yourself, even if it means experiencing a little pain or inconvenience in the short term. Then, when you do become debt free, you can take that extra money you've been using to pay down your debt and put it in your checking or savings account each month instead. That “spare” cash will seem like an amazing windfall. Hold that thought close as you scrimp and save to send every spare penny to your creditors.

On the other hand, you may have been a little too ambitious when you set that particular target. Maybe you can't really afford to send such a large sum. In that case, extending your ultimate pay-off date could be the better option. For example, by adding two more months to your goal, you'll add a few hundred dollars to your budget. That amount of money could bring welcome relief. Before doing so, though, take another look at what you are currently spending your cash on. You may be able to swing your original plan after all.

Draw up an accurate budget. If you're like most people, you have underestimated what you really spend. List everything, not just mortgage or rent, utilities and groceries. Go into great detail so you don't forget about common expenditures such as coffee, lunches out, birthday gifts and random drugstore items.

Analyze each line item for importance. Eliminate what you can get rid of until April. Total what remains and subtract it from your net monthly income. What you have left over is the amount that you really have available for maximum debt repayment. If it's it least as much as you previously planned for, keep your goal intact. However, if it's less, give yourself a break — and send a smaller, though still fixed, payment until you're in the clear.

To banish balances quickly, push yourself hard and be realistic. When you do both, you'll succeed.

Rah rah rah! The finish line is not that far away!