CREATE your own debt-elimination plan. The method is quite simple:

CREATE your own debt-elimination plan. The method is quite simple:

Set aside a monthly amount;

Pay all minimum amounts;

Pay extra money towards the debt with the highest interest rate.

This method will ensure that you pay the least amount of interest and repay your debts as soon as possible.

The trick to paying the least amount of interest possible is to pay extra money towards the debt with the highest interest rate. Obviously, you want that debt paid off as soon as you can because each month it costs you the most.

The trick to paying off your debts in the least amount of time is to set a fixed total amount to pay each month. The trap many people fall into is that they only pay the minimum payments. These minimum payments are designed to keep you paying that high interest rate for as long as possible.

By paying a fixed total amount each month, as one debt is paid off, you will have more money to pay towards another debt. This is called the "snowball" effect.

First, determine your ability to pay. If your total payments are much more than you can afford, you are in trouble. Debt counsellors are very helpful in this regard.

Next, you need to make a commitment to stop getting further into debt. Cut up your credit cards and learn to live within your means.

If you are living a lifestyle that depends on credit, you will soon dig a hole for yourself that you cannot climb out of.

It is very important to stop spending more than you earn each month. The whole family have to become involved and even the children have to understand that there will be no spending on luxuries and that every member of the family will have to make sacrifices.

Do not count on future bonuses, inheritances, refunds or any other non-dependable income to bail you out. If you make R10000 a month, you must spend less than that amount a month.

Look for ways to cut back. Learn to buy what you need and not what you want.

Now, let us look at each step of your ultimate debt-reduction plan more closely.

First, determine how much you can afford to pay each month towards your debts. At the minimum, it should be the total of all your minimum payments for the current month.

You may need to examine your spending for the last several months. Find things you can eliminate or do without. Postpone purchases and cancel subscriptions. Do whatever is necessary to free up more money to pay off your debts.

You may even want to postpone investing for a while if your investments are beating the interest you are paying on your credit card. A better investment would be to repay your debts.

Once you have your monthly debt repayment amount set, you need to write down each monthly debt you are paying. Record the creditor's name, the current balance and the interest rate. Then take a separate sheet of paper and reorder the debts so that the debt with the highest interest rate is at the top.

As each monthly bill comes in, pay the minimum payment. Subtract the minimum payment amount from your set monthly total. After all the bills are paid for the month, take any extra money left over and make another payment on the debt at the top of your list.

You can make an additional payment this month or save the money to add to next month's accounts. But do not spend it.

As each debt is repaid, cross it off your list, but keep paying the total monthly amount you set at the beginning. This will accelerate your debt repayment and save hundreds, even thousands of rands in interest charges.

The two keys to your ultimate debt elimination plan are to stop getting further into debt and set your monthly debt repayment amount.