Do it Yourself Debt Relief – The Pay in Full Strategy

Millions of Americans have found themselves buried in debt and looking for solutions. The average consumer’s indebtedness has grown steadily each year, with the default rate remaining steady. While this is good news for credit card companies, which benefit from high interest rates, it is not good for those trying to pay off debt.

Today’s Do-It-Yourself culture promotes looking for ways to obtain debt relief, without hiring a professional. Accomplishing this takes time and financial discipline. If only minimum payments are made, it will take years or even decades to become debt free, and cost thousands of dollars in interest charges.

Suitability: For those who want to pay debt off in full, have the financial ability to do so and have a high level of financial discipline, this could be an appropriate strategy. You also need to be capable of making current debt payments with additional funds each month earmarked to paying down debt.

For those struggling to keep up with minimum payments or make occasional late payments, this might not be the best solution. If you are spending more than you make, even after attempts at sticking to a budget, you may not have enough income or enough discipline to find success.

Benefits of the D.I.Y. Method

  • All payments are used to pay down debt.
  • Your debt is paid in full and you can leave accounts open for future use, if desired.
  • Satisfaction of meeting all your contractual obligations.
  • Learn to manage money efficiently.

Challenges of the DIY Method

  • Still paying high rates of interest and fees on your cards.
  • Could take many years or even decades to eliminate debt depending on balances and if you are to pay more than the minimum each month.
  • Any late payments will remain on your credit report for 7 years.
  • Fees and interest could more than double the original purchase amount.

How to Find Success Paying Down Debt

There are essentially two ways to have access to more cash. The first is to earn more money and the second is to reduce expenses. Utilizing both strategies will lead to the fastest success.

Step 1: Evaluate spending and determine areas where you can cut back. It may take several years to pay the debt off so focus on long term strategies. This should also consider your lifestyle and areas where you can change your spending behavior permanently. Taking lunch to work, reducing food and energy costs, and eliminating expenses for items that do not hold value is the best place to start. Being keenly aware of where your money is going will give you better control over spending.

Step 2: Evaluate your income. Can you accept overtime shifts to earn more money? Take on a second job, convert a hobby into income, or work online. All of these will add income to your bottom line.

Step 3: Establish a realistic budget and stick with it. A budget on paper is not worth much if you don’t follow it. Set a budget and then do not go over.

Step 4: Review current debt and set a plan in motion. If you can afford to more than minimum monthly payments each month, you might consider the Accelerated payment Strategy.  Either take the lowest balance or the highest interest rate. Then pay minimum payments on all other cards. Make all extra payments on the card you want to pay off first. Once that card is paid in full, add the monthly amount to the next card.

With discipline and patience you will be able to eliminate your debt assuming you have sufficient income and can manage your expenses responsibly.   If you struggle with the discipline needed to go it alone, then you want to seek out other alternatives such as credit counseling, a debt negotiation plan or a credit card modification program.


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