How to Create a Debt Repayment Plan: Step-by-Step

1. List All Your Debts
   Write down every balance, interest rate, and monthly payment.
2. Organize Debts by Priority
   Sort by balance (for snowball) or interest rate (for avalanche).
3. Set a Realistic Monthly Budget
   Determine how much you can put toward debt above your minimum payments.
4. Choose a Repayment Strategy
   Decide whether to pay off smallest debts first (snowball) or highest interest first (avalanche).
5. Make Extra Payments Toward Your Target Debt
   Apply all extra funds to your chosen account while paying minimums on the rest.
6. Track Your Progress
   Mark each debt as you pay it off—celebrate milestones along the way.
7. Adjust as Needed
   If your income or expenses change, revisit your plan and update your approach.

What to Expect When Creating a Debt Repayment Plan

• You’ll feel more organized and in control: Getting your debts on paper gives you a clear starting point.
• Progress may start slow, but builds over time: Paying off small debts frees up cash for bigger ones.
• Consistency is key: Regular payments matter more than perfection.
• Setbacks happen: If you miss a payment or face an unexpected bill, just adjust your plan and keep moving forward.
• Small wins boost motivation: Achieving short-term goals keeps you focused on the finish line.

Pro Tips & Common Mistakes to Avoid

• Automate payments when possible: Avoid missed due dates by setting up automatic transfers.
• Cut extra expenses and redirect the savings: Even small changes can add up quickly when put toward debt.
• Celebrate every debt you pay off: Mark each milestone to stay motivated and see your progress.
• Don’t rely on memory alone: Skipping a written plan makes it easy to lose track or get discouraged.
• Avoid taking on new debt while repaying old balances: It can slow or even reverse your progress.

Debt Repayment Success: Carlos’s Story

Paying off debt can feel impossible until you have a clear plan. Here’s how Carlos, 39, tackled his debt and turned things around:

Carlos’s story: Carlos was juggling multiple credit cards and a car loan. He sat down and listed out every debt, interest rate, and minimum payment. After researching strategies, he chose the debt snowball method and started putting every extra dollar toward his smallest balance.

As each small debt disappeared, he rolled that freed-up payment into the next one. Carlos tracked his progress on a spreadsheet and celebrated each payoff. Within two years, he was completely debt-free and proud of the steps he’d taken.

The result? A written plan, steady effort, and a focus on progress helped Carlos achieve debt freedom—and a new sense of financial confidence.

Frequently Asked Questions

Need Guidance Building Your Debt Repayment Plan?

Not sure where to start, or want to double-check your strategy? Money Fit’s counselors can answer your questions, explain your options, and help you feel confident about your next steps—always with no pressure.