Skip to content
United Settlement
  • Manage Your Debt
    • get-startedGet Started
    • settlementDebt Settlement
    • consolidationDebt Consolidation
    • debt-managmentDebt Management
    • bankruptcyBankruptcy
    • credit-cardCredit Card Debt
    • businessBusiness Debt
    • car-loanAuto Loan Debt
    • student-debtStudent Loan
  • Understand Your Debt
    • credit-cardCredit Card
    • business-2Small Business Debt
    • medicalMedical
    • loansLoans
    • umbrellaCredit Card Relief
    • interest-ratesInterest Rates
    • student-debtStudent Debt
  • Tools & Resources
    • faqFAQs
    • credit-cardCredit Guidance
    • calculatorCalculator
    • call-usContact Us
    • contact-usAbout Us
  • More
    • Debt Settlement
    • Debt Consolidation
    • Reviews
    • FAQs
    • About Us
    • Contact Us
    • Blog
    • Sitemap
    • Debt Relief by State
Professional Debt Relief Programs
Logo
United Settlement
phone icon 888-574-5454
client icon Client Log In
  • More
    • About Us
    • Reviews
    • Contact Us
    • Debt Settlement
    • Debt Consolidation
    • Debt Management
    • Business Debt Relief
    • Credit Card Debt Relief
    • Debt Relief by State
    • FAQs
    • Blog
    • Sitemap
Qualify For Debt Relief
Professional Debt Relief Programs
  • Manage Your Debt
    • get-startedGet Started
    • settlementDebt Settlement
    • consolidationDebt Consolidation
    • debt-managmentDebt Management
    • bankruptcyBankruptcy
    • credit-cardCredit Card Debt
    • businessBusiness Debt
    • car-loanAuto Loan Debt
    • student-debtStudent Loan
  • Understand Your Debt
    • credit-cardCredit Card
    • business-2Small Business Debt
    • medicalMedical
    • loansLoans
    • umbrellaCredit Card Relief
    • interest-ratesInterest Rates
    • student-debtStudent Debt
  • Tools & Resources
    • faqFAQs
    • credit-cardCredit Guidance
    • calculatorCalculator
    • call-usContact Us
    • contact-usAbout Us
  • More
    • Debt Settlement
    • Debt Consolidation
    • Reviews
    • FAQs
    • About Us
    • Contact Us
    • Blog
    • Sitemap
    • Debt Relief by State
United Settlement » Become Debt Free in 2020 – Plan Ahead
marcel August 15, 2019

Become Debt Free in 2020 - Plan Ahead

The end of 2019 – and the decade – is fast approaching – and with fewer than six months to go until the beginning of 2020, it’s time to take a look at the steps that can be taken toward achieving a debt-free lifestyle in 2020. Are you on track to achieve your financial goals and become debt free in 2020? Let’s take a closer look.

Take Inventory

The first step toward getting your personal financial situation in order is to ask yourself a series of questions and to develop some written financial goals. What are your goals? Do you want to make more money?

Pay down more debt? Become Debt Free? Reduce expenses? Save for an emergency fund? Save more for retirement? Are you on track toward reaching these financial goals over the next eighteen months? What elements of your personal financial situation have changed in the past year? How have your income, expenses, debt, savings and investments changed?

These are all important questions that bear reflecting upon. But perhaps the most important question is this: Are you adhering to a written monthly budget successfully and in the process of paying off debt (and contributing to savings) with 20% or more of your monthly disposable income each month?

Have a Written Monthly Budget

If you are serious about becoming debt free within eighteen months, you must start with a written monthly budget that is manageable and easy to live with. This means you must get clear on all sources of income and expenses and itemize them clearly, written down on paper, so that you know exactly how you stand with your current monthly inflows and outflows.

It is your monthly take-home after-tax disposable income that matters first. This is the figure from which you must deduct all expenses each month, and it is therefore important to get clear on all of your expenses – both fixed and variable – and to be as accurate as possible.

The 50/30/20 Budget

The 50/30/20 budget is a good place to start. In this budgeting framework, 50% of your take-home pay gets allocated to necessities, 30% to “wants” and 20% to savings and debt repayment. Necessities include things like housing, food, transportation, auto insurance and utility bills.

Among these, certain categories such as housing, car payment, auto insurance, internet, and cell phone bills are somewhat fixed and can show identical amounts month after month. Other expenses, including utility bills such as those for electricity, heating and water are variable and may fluctuate seasonally.

These require more digging to arrive at a proper accounting through a minimum of six months (ideally twelve) of payment records to calculate averages. Consult your account payment history on utility company websites to arrive at an accurate figure for these expenses in your budget. Your comprehensive list of expenses needs an accurate monthly figure next to each individual expense.

Here is where the 50/30/20 rule comes into play. Drawing a clear line between necessities and wants is important here, as is automating the debt repayment and savings of 20%. If necessities extend beyond 50% of after-tax income, the shortfall hit goes to “wants” – not to debt repayment and savings.

How To Become Debt Free

The 50/30/20 budget dictates that 20% of after-tax income be allocated toward debt repayment. But what if we can bump this higher to 30%? What if we reduce our “wants,” for the next eighteen months – eat fewer restaurant meals, stay home with Netflix, family and friends – instead of expensive nights out for entertainment, and buy quality used clothing at thrift stores instead of new name-brand items at department stores?

What if for the next eighteen months we live somewhat frugally and develop a habit of minimalism, that less is more, while practicing gratitude – reminding ourselves of everything we already have, and that what we have is enough?

If we do this while bumping our debt repayment percentage to 30% (while dropping the “wants” to 20%), we will effectively be paying off our debt at a rate that is 50% faster! You can now pay the equivalent amount of debt down in eighteen months that otherwise would have taken twenty-seven months!

Use Savings to Pay Off Debt

Other strategies to consider may involve taking some money from savings to pay down high interest rate credit card debt. Though it is important to have some savings – particularly an emergency fund (three to six months or more of expenses in the event of job loss or unexpected medical emergency) the prevailing low-interest rate environment dictates that interest earnings from savings will be minimal and far less than the cost of carrying high-interest rate debt.

Therefore, it does make sense, if possible, to reallocate some money away from savings toward debt repayment. If you already have a good track record of debt repayment, you should also call your various creditors and attempt to negotiate a lower interest rate. Emphasize the length of your relationship, solid payment history and the fact that your account remains in good standing.

Every lower percentage point that gets shaved off of the interest rate will translate into interest expense saved over the course of the next eighteen months, and the dollar savings will add up, making it easier for you to become debt free by the end of 2020.

Additional Strategies to Reduce Debt

How about using that tax refund check to pay down some debt in one fell swoop? Instead of splurging the entire refund on “wants,” use part or all of it to pay off debt that will reduce your monthly payments for the rest of the year while lightening your debt load closer toward a debt-free lifestyle.

Meantime, if you can take advantage of a zero or low-interest rate promotional credit card balance transfer for twelve to eighteen months, by all means do so. This will lighten your interest expense in the coming year, thereby improving your cash flow that can be used to pay down debt principal on other credit cards. Just be certain to remain aware of when the low-interest rate promotional period expires.

You should also be looking for additional ways to raise cash. Selling extra household items, electronics and clothing on eBay, OfferUp, Poshmark, Facebook Marketplace and Craig’s List can bring in a steady stream of cash flow that can be utilized for paying down debt. There’s also no harm in considering an additional part-time job in the retail or service industry that can easily bring in an extra thousand dollars or more each month.

Finally, be aware of any statute of limitations in your state as they pertain to paying off what have become old debts. Some states will not allow a debt collector to pursue collections on debts after a certain period of time, so if you are paying off debts that are seven to ten years old, or even older – find out whether your state’s statute of limitations on old debt has passed and whether you can actually stop repayment on what has become an expired debt.

Steven-Brachman

About The Author: Steven Brachman

Steven Brachman is the lead content provider for UnitedSettlement.com. A graduate of the University of Michigan with a B.A. in Economics, Steven spent several years as a registered representative in the securities industry before moving on to equity research and trading. He is also an experienced test-prep professional and admissions consultant to aspiring graduate business school students. In his spare time, Steven enjoys writing, reading, travel, music and fantasy sports.

Excellent

Based on 356 reviews.
Overall 4.4 out of 5 stars

View All Reviews

Buddy Ewing

December 28

Time and again, I did not know how to handle my debt

Time and again, I did not know how to handle my debt. Even when I paid my credit cards off, a few months later I was back in the same situation. But this year is different. I contacted United Settlement...

Lianne Finnegan

December 27

Business debt relief is what I needed when I contacted the United Settlement crew

Business debt relief is what I needed when I contacted the United Settlement crew. They are committed to helping people like me who requires more help with business debt problems. I had several loans out...

Wren Herrera

December 26

Student loan debt was the reason that I reached out to United Settlement

Student loan debt was the reason that I reached out to United Settlement. I had about 200K plus in student loan debt for my business degree. I recognized that I had to do something when I struggled to make...

Jardel Shah

December 20

There is nothing worse than falling ill and then having to deal with super expensive medical bills

There is nothing worse than falling ill and then having to deal with super expensive medical bills that you really do not have the patience or experience to handle. I was pleased with my experience with...

Iain Holt

December 14

I took out a few personal credit cards to open my boutique

I took out a few personal credit cards to open my boutique. When than money ran out, I went on to take out more loans for my business. However, this quickly turned into a disaster. Today, I now have a mountain...

Avaya Adkins

December 12

Who knew that auto loans were so negative for your credit lines

Who knew that auto loans were so negative for your credit lines? Especially, if they are not paid off right away. As a married couple, we had vowed to keep auto loan debt at bay. But, we found ourselves...

Lucien Rojas

December 07

I didn’t have a ton of debt when I contacted United Settlement

I didn’t have a ton of debt when I contacted United Settlement, but what I wanted from them was some information about how to handle my debt management. I knew that I needed some more information to get...

Madiha Matthams

December 04

Federal student loans were the reason I ended up at United Settlement

Federal student loans were the reason I ended up at United Settlement. I had about $200K to pay back and I was not quite sure where to tackle that debt once I got out of school. But I reached out to that...

Asim Horner

December 03

Everyone knows how horrible student loans are

Everyone knows how horrible student loans are. For me and my family, they had become more than just an annoying monthly bill. They had taken over our lives. That’s why I decided to take action and find...

Frankie Mckee

December 03

I wanted to be more informed about my own personal and business debt

The number one reason I chose to contact United Settlement was I wanted to be more informed about my own personal and business debt. When you have credit card debt, it can be extremely frustrating. Especially...

Justine O'Ryan

November 29

I cannot believe I was finally able to find a company to actually help me pay off my debt

I cannot believe I was finally able to find a company to actually help me pay off my debt! I thought I would forever be chained to debt. But United Settlement offered me multiple solutions for paying off...

Jerry Conley

November 21

What your money can do for you.

The great reviews that you have thanks.

Cathal Brett

November 19

Dealing with high interest auto loan debt was difficult for me and my wife

Dealing with high interest auto loan debt was difficult for me and my wife. We thought we got a good deal, but it actually was a horrible loan. So, we reached out to United Settlement, and they got to work...

Aliesha Ward

November 12

No one really wants to go bankrupt, and neither did my family

No one really wants to go bankrupt, and neither did my family. But fortunately, we did not have to go that route. It was our last resort, but United Settlement helped us figure out a way around bankruptcy...

Filip Rosas

November 08

I had been through about 5 different credit counseling agencies before I found United Settlement

I had been through about 5 different credit counseling agencies before I found United Settlement. I had read through their reviews and made the decision to move forward with them. I also was so impressed...

Susanna Fasenmyer

November 07

Save time and money

Just what I needed, already had a company I was working with and I switched because I was able to same some money. Brian and Alfred were really nice and helpful

Warren Hutchinson

November 07

As a business facing some unwanted financial difficulties

As a business facing some unwanted financial difficulties, we were at a loss for what to do next when our debt started to soar. We took a closer look at our financial situation by contacting United Settlement....

Bobbi O'Quinn

November 02

I had no clue how to create a debt management plan

I had no clue how to create a debt management plan and in fact, I didn't even know what a debt management plan was. Fortunately, I reached out to United Settlement before I had too much debt to tackle....

Dawn Mercer

October 31

Being burdened by debt is one of the biggest struggles we faced as a family

Being burdened by debt is one of the biggest struggles we faced as a family. But these people at United Settlement were very helpful in deciphering the different debts we had and then coming up with a debt...

Forrest Guest

October 29

Student loan debt was my worst enemy before I ran into United Settlement

Student loan debt was my worst enemy before I ran into United Settlement. I really thought I would just have terrible credit for the rest of my life because I will never get out from underneath it. It was...

Are you in debt? we can help

  • Amount
  • Contact

How much do you owe?

Related:

  • Debt Settlement
  • Tax Debt Relief
  • Can You Negotiate Your Own Debt
  • Debt Consolidation
  • Debt Management
  • Contact Us
  • 241 West 30th Street
    3rd Floor
    New York, NY 10001
  • (888)-574-5454
  • [email protected]
  • Privacy Policy
  • Terms & Conditions
  • Debt Relief Services
  • Debt Settlement
  • Business Debt Relief
  • Credit Card Help
  • Debt Consolidation
  • Debt Management
  • Student Loan Help
Learn more about debt relief


    • facebook
    • Google Plus
    • Twitter
    • YouTube
    • Instagram
    • Linkedin
    • facebook
    • Tools & Resources
    • Contact Us
    • About Us
    • Blog
    • Debt Calculator
    • Frequently Asked Questions
    • Sitemap
    • Reviews
    • Client Login
    Free Savings Estimate
    Apply Here
    Clients who stay according to debt relief program can realize approximate savings of 50% before fees, or 30% including fees, over 12 to 48 months. All claims are based on enrolled debts. Not all debts are eligible for enrollment. Not all clients complete our program for reasons such as: their ability to save sufficient funds. Estimates based on prior results, which will vary based on specific circumstances. We do not guarantee that your debts will be lowered by a specific amount or percentage or that you will be debt-free within a specific period. We do not assume consumer and/or business debt, provide tax, bankruptcy, accounting, legal or credit repair services/ advice. Our program is not available in all states. Please contact a tax professional to discuss tax consequences of settlement. Please consult with a bankruptcy attorney for more information on bankruptcy. If you have any additional questions please contact us.
    Copyright 2020. United Debt Settlement, LLC