Question: How do you climb Mount Everest? Answer: One step at a time.
Jean-François Carrey, a mountain climber who performed this feat, says that if you want to overcome such a tremendous challenge, you need to set short-term goals. This is because it can be very demoralizing to only look at how far you still have to go, and you tend to give up. If you are like many people facing financial problems, repaying your debts can seem as difficult as climbing Mount Everest. So how should you go about it?
Although the logical approach is to start paying off the debts bearing the highest interest rates, this can take time if the balances involved are huge. What’s more, even if you make monthly payments, it sometimes seems as if the debt will never be fully paid off. That is why many people give up. However, it would be better for those people to ignore the logical approach and focus instead on the small amounts they need to pay back. This is the “step-by-step” strategy that mountain climbers use to climb the tallest mountains. As we gradually pay off our smallest debts, we become more confident and develop the momentum needed to take on our bigger debts.
This very simple approach consists of four steps:
- Draw up a list of all your debts with the smallest first and then the others in ascending order of size;
- Make the minimum payment on each debt listed;
- Apply the surplus funds available to the smallest debt in order to reduce the outstanding balance on that debt until it is totally paid off;
- Then move on to the next smallest debt and repeat step 3 and so on until all your debts are completely paid off or your finances have become manageable again.
Although this is not the quickest way to get rid of your debts, it does use realistic goals in a process whereby which every small victory can boost morale and strengthen willpower.
If you are in the throes of too much debt and are worried that you can’t pay it all back, why not try this strategy? Above all, don’t forget that you can succeed if you just take one step at a time.
On the other hand, if your debts are insurmountable and collection agencies are harassing you more and more over the phone, a consumer proposal might be an effective solution to your financial difficulties, which also avoids declaring bankruptcy. Feel free to contact a Ginsberg Gingras trustee for more information.