If you’re one of the 55 million American households struggling with debt, figuring out how to budget for debt repayment is a necessary step toward financial success.

The amount of debt you owe can be intimidating, especially since the average debt is over $90,000. But with a solid plan and a bit of discipline, you can not only pinpoint how to budget for debt repayment in the most effective way — but also pay on time. 

Let’s get started on a solid plan.

Don’t Stop At The Minimum

Many saddled with credit card debt only pay the minimum balance each month. While you are not necessarily wrong in doing that, you are paying what is owed, it’s a behavior you will want to change when determining how to budget for debt repayment. 

Instead of the minimum, budget for paying as much as you can above the minimum each month. Even if it doesn’t seem like it’s making a huge dent in repaying your debt, it’s a good start. 

Try The 50/30/20 Approach

There’s not one right path for how to budget for budget repayment. However, many financial advisers recommend the 50/30/20 budget plan when paying down debt is a priority.

Under the 50/30/20 approach, 50% of your monthly income goes toward essentials, including rent or a mortgage and utilities. In addition, 30% goes toward “wants,” which are expenses other than what’s technically essential, including travel, going out to eat, and buying the latest gadgets. 

The 20% that’s left is there for paying down debt or going toward your savings. Most people use the 20% to make extra payments toward their debt. Some even take money from the 30% for wants to tackle their debt even faster or save more.

Track Your Progress

Along with writing out a monthly budget, commit to keeping close tabs on how you’re doing on both expenses and debt payments. Outline all of your debt totals and the amount you’re putting toward each at the end of the month. Adjust as you go if needed.

Setting some financial goals may also help. Figuring out a budget for debt repayment requires discipline and setting such goals will help keep paying down debt at the top of your list.

The goal may be to simply erase one debt total at a time. It may be to pay down half of your debt within a certain time. Either way, setting goals may help the process go more smoothly. 

Sign Up For Automatic Payments

Most Americans carry more than two credit cards at a time, and with other forms of additional debts, such as student or home improvement loans, it can be challenging to keep up with what is owed and when it’s due.

Organizing the due dates on a spreadsheet will help, but if you often have trouble paying bills on time, setting up automatic payments may work even better. Automatic payments can be set up through your bank or a particular lender.

The amount you pay each month and the day you pay it on is up to you. Such set payments are often a vital part of creating a plan on how to budget for debt repayment.

Think About Debt Consolidation 

If you’re one of the many people with multiple debts, rolling them into one monthly payment may be possible. By using a debt consolidation loan or a balance transfer credit card, you will have a new debt total with the possibility of a lower interest rate.

Just keep in mind that this option isn’t available to everyone, and you may need to have excellent credit to qualify.

Pursue A Payday Loan 

You will most likely encounter roadblocks while planning how to budget for debt repayment. A financial emergency such as a vital home or car repair, last-minute but necessary travel, or a trip to the emergency room, can be a typical setback to paying down debt faster.

When this happens, a payday loan may help. For those who are employed, a payday loan helps cover the unexpected expense of a financial emergency in between paychecks. At Alabama Title Loans, Inc. we are proud to offer payday loans of up to $500 for those who qualify.

We’ve made the process quick and easy. In as little as 30 minutes you can qualify for a payday loan — and receive the cash you need as early as the same day.

To begin the process, simply start online. Fill out the short payday loan form on our homepage and we’ll give you a quick call to guide you through the process.

Get Started Today

Figuring out how to budget for debt repayment is a giant leap forward in establishing a fantastic financial future for you and your family. To get your payday loan request started, visit our homepage, call us, or visit an Alabama Title Loans, Inc. location near you today.

Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.