If you Google ‘debt planning’ you’ll be instantly flooded with all kinds of strategies. Some are tried and true and some are new concepts that have recently been highly marketed. While most of these options will lead to debt reduction, the trick is to follow a plan that you can stick with. Like most things in life, following through with your plan is the best and only way to pay down your debt.
So how do you pick a debt planning strategy that you can really use? As the saying goes: know thyself. If you understand how you work (and what does and doesn’t work for you), you can pick the best option.
Here are some questions to think about when debt planning and getting to know your own personality.
- Do you like to take risks? If this is your personality type, restricting spending and paying down all of your debts at once might be the best option for you.
- Are you more of a slow and steady person? If small amounts of progress works for you, choose the debt with the smallest balance first and pay that one off before moving onto the others.
- Do you want small wins or one big one? If you want to see instant debt relief, you’ll have to pick the cards with the smallest interest to pay off first. If you are okay with small wins, pick the cards with the biggest amount of interest and chip away at those.
- Are you quickly demotivated if you don’t see success right away? If this is how you work, it might be a good idea to choose a card with a small balance first - this way, you can feel good about some amount of success and then move onto the cards with larger balances that take more time to pay off.
- Do you have a good track record of sticking with plans for a long period of time? If ‘yes,’ choose a plan that is highly detailed and move slowly towards your debt relief goals.
How you work makes a difference, so it’s important to choose a plan that works for you. Often, debt planners will choose a plan for you but they do not work simply because your personality type clashes with that option. Instead, ask for your options but select only those plans that resonate with your personality type.