How to spread all your debt across a year: the plan with dates on it
Knowing how much you owe changes nothing. Knowing which month each debt ends changes everything.
In short
To spread debt across a year: list each one with its balance and rate, work out your real monthly surplus, pay the minimums on all of them and send the whole surplus to a single one. When that one clears, its payment joins the surplus and moves to the next, so the plan accelerates every month. If the calendar will not fit into twelve months, the problem is the surplus rather than the order, and there are exactly three levers.
Most debt plans fail in the same place, and it is not willpower: they fail because they are an intention rather than a calendar. "I am going to sort out my debts this year" and "the card ends in April, the loan in September" are different things, and only the second survives a bad month.
What is needed before starting
Two lists, and usually neither exists.
The debts, each with three figures: outstanding balance, real annual rate and minimum payment. The monthly payment alone — the only thing most banks show — is not enough. Without the rate there is no way to know which one costs most.
The real surplus: what comes in minus everything that goes out, minimums included. Measured, not estimated, with a month of records. If you have never measured it, that is step one and it is in where does my money go.
3 figures
Per debt
Balance, real annual rate and minimum payment
1 debt
Where the surplus goes
Minimums on all of them, the rest entirely to one
Snowball effect
Why it speeds up
When one clears, its payment joins the surplus for the next
The calendar, month by month
The plan is built as a table and fits on one sheet:
- Order the debts. By rate if you want to pay less in total; by balance, smallest first, if you need to see one disappear soon. Both are valid and the real difference is usually smaller than people imagine.
- Every minimum, always. Missing one brings charges and interest that wreck any calculation.
- The whole surplus to the first on the list. Divide its balance by what you send each month: that is the month it ends. Write it down.
- Add its payment to the surplus and repeat with the next. The surplus is now larger, so the second falls faster than the first.
- Carry on to the end of the list or to month twelve.
What matters is not the arithmetic but having the dates written down. A plan with dates can be checked in March: either you are ahead or you are behind, and in both cases you know what to do.
Why it accelerates by itself
This is what surprises almost everyone building the table for the first time. The early months feel slow and the last ones go very fast, because each cleared debt frees its payment for the next.
That has a practical consequence: the worst moment of the plan is the beginning, when nothing is visible yet. Knowing in advance that it will feel that way stops people abandoning it in month two.
When the plan will not fit into a year
It happens often, and it does not mean the plan is wrong. It means the surplus is not enough, and then there are three levers and no more:
- Lower the rate. Refinance or consolidate the expensive debt. It only counts if the new rate is genuinely lower and the fees do not eat the difference.
- Raise the surplus. On the spending side, and if the obligatory already takes more than 70% of what comes in, on the income side.
- Extend the term. Eighteen or twenty-four months with written dates is infinitely better than twelve imaginary ones.
Choosing the third is not giving up. It is what turns a wish into a plan that can be kept.
And before starting, one month of cushion
It sounds contradictory and is not: with nothing set aside, the first surprise goes back on the card and undoes three months of progress. The full order and the number that decides are in save or pay off debt first.
Common questions
- Should I pay off the most expensive debt or the smallest one first?
- The most expensive costs less in total; the smallest gives a visible result sooner. The second is not irrational: a plan abandoned in month three saves nothing, and watching a debt disappear is what keeps people going.
- What if my income is irregular and I do not know my surplus?
- Build the plan on the average of your last twelve months, set slightly below, and treat good months as extra payments rather than raising the monthly commitment. A plan that survives a thin month is worth more than an optimistic one.
- Do interest-free instalments belong in this plan?
- In the calendar yes, because they take up your surplus every month; in the payoff order no, because paying them early saves interest that does not exist. Count them so you know your real surplus, and add no new ones while the plan runs.
Try it on your own money
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