Skip to content.

Pay Down Debt Plan Example

Jim and Amanda have five debts. These debts are the house payment, car payment, and three credit cards.

For many people the house payment is thought of as a monthly living expense rather than a debt payment. Jim and Amanda feel this way and put their house payment on the Expense Worksheet.

Their car payment and three credit card payments are part of their debt repayment plan. Their priority creditor payment is the car payment because it is secured debt. If they can't re-negotiate smaller payments or refinance, the full debt payment for the car is included in the debt repayment plan recorded on the Debt Worksheet.

After calculating their living expenses, the amount available for debt repayment (income minus expense) is $744.71. This is the amount left for payments for the car and credit cards. The car payment, $213.24, is paid first. This leaves $531.27. Even though the interest rates on their credit cards ranged from 9.0 to 19.25 percent, they decided to use the card with the smallest balance to identify the first creditor to get the Pay Down Debt Accelerator.

Total amount available for debt repayment is $744.71

Amount needed for car payment which was not changed is $213.44

Pay Down Debt Accelerator Original Amount $531.27

Debt Worksheet

Creditor Total Amount
Owed
Interest
Rate
Original Monthly
Payment
Amount
Past Due
Negotiated
Monthly Payment
Month #1
Payment
Amount
Month #2
Payment
Amount
Month #3
Payment
Amount