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About 103 million Americans carry credit card balances over from month to month, and the average credit card debt for balance-carrying households is $9,333. It’s not easy to pay off all debt every month. But it’s not impossible to tackle debt over time, especially with the help of a debt payoff planner. There are many debt payoff planner apps, programs, websites and methods available to use online, on your smartphone or with old-fashioned pen and paper.
Debt payoff planners can help you tackle all kinds of debts, not just credit card balances. Use these tools to also address the amounts owed on student loans, cars, mortgages and more.
What is a debt payoff planner?
The term “debt payoff planner” is a common way to refer to any tool that helps you budget for the immediate and aggressive reduction of your debt. One of the most empowering aspects of a debt payoff planner is that you can decide which debt to attack first, and you have control over the pace. You can go into aggressive pay-off mode, or you can pay it gradually, and you always have the choice to switch up your strategy.
The types of tools you use for a debt payoff planner are limited only by your personal preferences. You can use an app created to help you drill down and pay off debts; you can use a blank piece of paper; you can use a spreadsheet; you can use a premade budgeting workbook. The point is to choose the planner you’ll be motivated to use.
Pros of a debt payoff planner
- Helps get debt under control
- Exposes the underlying unhealthy spending habits that create debt
- Reinforces financial discipline
Cons of a debt payoff planner
- Can increase financial pressure since it demands more than making minimum payments
- Requires trial and error, as your initial plan might not work
- May take time to see significant results
Finding a debt payoff planner
Now that you understand what a debt payoff planner is and how it can help you get control of your debt, it’s time to take a look at some of the options you have for creating and following your payoff plan.
Debt payoff planning apps. Apps are a great way to simplify debt payoff by automating budgeting, spending and bill payment from your phone. There is no single best app, so you need to find the one that fits your needs and preferences. Example debt payoff planner apps include:
- Digit. This app doesn’t just analyze your spending to help you budget, it also automatically sets aside money into a Digit account for savings.
- Debt Payoff Assistant. An app devoted to debt repayment, Debt Payoff Assistant uses the snowball method to help you pay off debts from smallest to largest.
- Every Dollar. When you want a debt payoff planner app that lets you manually control your planned budget, Every Dollar is a good option. It features customizable templates that allow you to manually enter your income and expenses, so you can prioritize debt repayment the way you want to.
Debt payoff planning websites. If you’re more comfortable using a tablet, desktop or notebook for your debt payoff planning, then you might consider going to a website, such as:
- Mint: a popular web-based budgeting tool that makes budget suggestions after the program analyzes your spending.
- YNAB, which is short for You Need a Budget: a program that takes a simplified approach to budgeting with its four-rule methodology.
- Quicken: a fast budgeting, debt payoff planner and calculator for those who want a no-frills, quick visual budget.
- Paper/digital paper. If a more simple, straightforward approach to debt payoff planning appeals to you, then you might want to grab a pen and paper and do an old-fashioned paper budget as your free debt payoff planner. Alternatively, you could use a word processing or spreadsheet program to make that simple plan digital.
- Bullet Journal. One of the newer trends in planners is a Bullet Journal. This is a way of tracking goals and to-do lists using a mix of shorthand bullets and symbols. The goal is not just to increase organization and productivity, but also help you be more mindful about what you’re trying to accomplish. When it comes to debt repayment, the Bullet Journal can help you be more mindful about spending as you manually enter and analyze transactions and progress. You can also use it to create a timeline and goal-tracking system.
What’s the best debt payoff planner?
In short: the best payoff planner is the one you’ll use regularly. There is no magic behind the apps, strategies and options here. If you sign up for an account or download an app but never add your information, or if you choose to ignore your budget each month, you still won’t make progress on your goals. So, the best debt payoff planner is the one that you can understand, have easy access to and will follow until you pay off your debts or reach other financial goals.
Creating a plan to pay off your debt
These steps can help you on your way to paying off your debt:
- Create a budget. A plan to control and direct your spending is the backbone of any debt payoff planner, and that’s precisely what a budget is. In its simplest form, a budget is a strategy to prioritize your spending based on your goals — in this case, debt repayment — while making sure you don’t spend more than you earn.
Choose a strategy. When you want to pay off debt, there are a number of strategies you can adopt that help to guide your efforts. These include:
- Debt snowball: Pay off your lowest balance debt aggressively while making minimum payments on the rest of your debt. Once the lowest balance debt is paid off, target the next lowest, and so on.
- Debt avalanche: Use the same approach as the snowball method, but focus instead on your highest-interest debt.
- Debt tsunami: Prioritize debt repayment based on how much the debt stresses you out. In other words, if a loan from your parents causes you more stress than a high-interest loan, pay your parents off first.
Consider a debt consolidation loan. There are two potential advantages to a personal loan or other debt consolidation loan:
- a lower interest rate
- a single monthly payment
These features can help you save money and stick to your budget.
Planning to pay off debt is a great start, but it has to be backed up with action in order to make change. Focus on a debt payoff planner option that motivates you to execute your plan so you can actually enjoy the financial impact of debt reduction.