Debt Repayment Plan

Welcome back to Camp Frugal!

Now that I’ve introduced myself and my finances, it’s time to talk about a plan.  If you want to be without debt, you need a plan!

  1. List your debts
  2. Write down your monthly expenses
  3. Create a budget
  4. Choose your strategy


  1. List your debts

To start, you should look at all your accounts and record your debts.  This should include both dollar amounts and interest rates, which you’ll use to decide which debt repayment method you’ll use.

I know this can be scary, but you need to know where you’re starting from.  As you pay down your debt, it will be great to know how far you’ve come!  Look at it like a weight loss journey.  This list is your before picture.

You can find mine here.

  1. Write down your monthly expenses

First write down the fixed expenses—mortgage, car insurance, car payment, debt minimum payments, etc.  These are expenses that don’t change month to month.  They are predictable and unchanging.

Next, write down your other expenses—gas, electric, groceries, etc.  These are expenses that are necessary, but often change month to month.

Finally, write down your luxury expenses—cable, software subscriptions, restaurants, etc.

  1. Create a budget

You can do this by hand or by spreadsheet.  I suggest a spreadsheet because it’s faster and you can tweak it easily.  Excel offers many household budget templates online.

First, you need to know how much income you bring in each month.  For most of us, this number only changes in the event of a raise, promotion, or job change.  However, there are some people who have income that varies greatly from month to month.  This will require a little more planning on their part, but for the sake of this exercise, an average monthly income will work.

Next, enter your fixed expenses.  These are usually your top needs—home, car, etc.  This is where you’ll enter those expense you thought about before like your mortgage.

Next, enter the expenses that change month to month.  This won’t be perfect since it often changes, but you could over budget to ensure you have the money to pay those bills each month or take an educated guess (i.e. electric use goes up in summer and winter).

Finally, enter those luxury expenses we talked about.  These are expenses that you don’t NEED, but often have.  Do you get a haircut every few weeks?  Do you get a monthly pedicure?  Do you send your dog to daycare 3x a week?

For some of you, the next step is to look at what you have left over and choose your debt repayment strategy.

For most of us, there’s a reason we have so much debt.  It’s because we’re spending too much.  It’s time to take a look at those luxury expenses and decrease or eliminate what we can.  Often you can find frugal alternatives to some of these luxuries.  Examples:

  • Your partner could learn how to cut your hair (trust required!!)
  • Give yourself a pedicure or only get them for special occasions
  • Dine out less frequently or as frequently at inexpensive restaurants.
  • Does your dog really need daycare 3x a week or would your pup get the same benefits from a little one-on-one training and exercise with you?

Next, look at those expenses that change month to month and think frugal.

  • Can you change your thermostat by a few degrees and save a little money there each month?
  • Could you meal plan to decrease your grocery bill?
  • Do you need that Starbucks coffee every morning?

The goal here isn’t to deprive yourself of fun.  If paying down debt is a drag, you will probably jump ship pretty soon.  I don’t want that.  I want you to stay aboard and reach your goals.

After step 3, you should have a good idea at how much extra money you have each month.  I bet your surprised it’s more than you thought!

  1. Choose your strategy

Now, take a second look at your debts and decide what debt repayment strategy you’ll use.

How did this planning exercise work for you?  Did you do anything differently?  Would you like some Excel budget spreadsheet samples?  Please comment below.  I’d love to hear from you!

In my next post we’ll talk about debt repayment vs emergency fund vs investments.

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