FOCUS on Your Debt

For many people, outstanding financial debt obligations are no big deal. However, if you have identified debt reduction as an opportunity for improvement in your life, you may benefit from an improvement method my company calls the Focus Improvement Process. It’s not so much a Debt Reduction Plan in itself, but a guide to help you find and implement a Debt Reduction Plan that will work best for you.

 

If one of your goals is to reduce your debt, you can start with my debt reduction article as a primer. I would also suggest reading personal finance book reviews from the online retailer Amazon. These reviews are a great source of information on what has worked for other people, and you don’t have to buy the books, you can borrow them from your local library.

Another great resource is to identify mentors who have been in similar situations as you. Ask them what methods they used to manage their debt. Personally, my wife and I followed the debt reduction plan as presented by best selling author and syndicated radio host Dave Ramsey. Though I do not agree with everything that Ramsey says about managing money, his specific plan for debt reduction is excellent, but it requires significant sacrifices. There are other “experts” in the financial counseling business that may have a gentler reduction plan that is more suitable to your style.

Whatever your situation, you can find free or relatively inexpensive material that will help you come up with a debt reduction plan online, at your local library, or at the bookstore.

Communicate Your Plan
In my opinion, the single most important element of any debt reduction plan is communication between all members involved. Of course, when the FOCUS method is used in personal finance matters, the communication referred to is that between you and your spouse (and to a lesser degree the kids if they are old enough to understand). Both spouses need to be on the same page for your action plan to work. If one spouses is going about resolving a crisis a different way (or not at all), you often times will end up working against each other. Both parties must agree on the Debt Reduction Plan before moving forward.

Undertake the Plan
It is now time to implement your chosen Debt Reduction Plan. It is very important to set goals along the way and measure debt reduction performance as you progress. When we started paying down our debt, I maintained an Excel sheet with a running total of all outstanding debt. As a debt was paid down, the total outstanding debt balance would go down as well. This was very encouraging to see and kept us motivated throughout the process.

If you are not meeting your debt reduction goals and need to reformulate your Dept Reduction Plan make sure that you communicate these changes to your spouse/family and you both agree on the new plan (this is very important).

Summarize the Results
If your Action Plan was effective, ensure that there were no adverse effects on other areas of your life. Take a moment to appreciate the hard work and sacrificing you have made in your journey to pay off your debts, and vow never to put yourself in that situation again. Make a mental note of what worked for you and what didn’t; capture those thoughts on a sheet of paper and file it away in your records under MENTOR. This way, when someone comes to YOU for advice on money someday, you’ll have something to refer back to!