[ITEM 5] QUESTION: How to make a debt repayment plan?

A competent debt repayment plan begins with a detailed inventory of all your existing loans, microloans, and credit cards. Gather complete information for each obligation into a single table, including the current remaining debt, the active interest rate, and the size of the minimum monthly payment. Having the complete picture before your eyes allows you to objectively assess your debt load and choose the most effective strategy for further actions.

In modern financial practice, it is customary to use two main strategies for early debt repayment, each of which has its own psychological and mathematical advantages. The first strategy is called the avalanche method and involves directing all free money to pay off the loan with the highest interest rate, which minimizes the total overpayment. The second strategy is known as the snowball method, where you first completely close the smallest debt in size, receiving a powerful psychological boost from the decrease in the number of creditors.

Regardless of the chosen strategy, the key element of success is establishing a fixed amount in the monthly budget for early repayment. Include this payment in the list of mandatory expenses immediately after paying utility bills and buying basic food products. This approach guarantees that the money will not be spent on spontaneous desires, and your debt will steadily decrease every month until it is completely eliminated.