Step 8: Eliminate All Non-Mortgage Debt
Phase 2: Build a Routine · Step 8 of 12
The last of the consumer debt.
In short
Use the same one-at-a-time method from Step 4 on every remaining debt except the mortgage: student loans, car loans, anything under 10%. Smallest balance first. And give yourself a little more room to live, so you finish instead of burning out.
Why this comes now
With a six-month cushion, it's finally safe to throw everything at the long, low-interest debts. For many families this is the longest stretch, which is why a small raise in Personal Spending matters now. Burnout is how people end up with a new car loan.
How to do it
- List what's left besides the mortgage, smallest balance first.
- If you didn't in Step 7, consider raising Personal Spending a little before you start.
- Pay the minimums on everything and send the full surplus to the first debt.
- Roll each freed-up payment into the next debt, and send raises there too.
- Don't borrow for the next car. Save for it instead.
Example Family: Alex and Jordan
Left: student loans of $20,000 at 8% and $50,000 at 6%. They raise Personal Spending to $2,500 and, with a few raises, start with about $1,000 a month. The $20,000 loan goes first, then the $50,000. When both are gone: Income $6,000 · Recurring Expenses $1,600 · Personal Spending $2,500 · Savings & Debt Repayment +$1,900 a month.
Examples are hypothetical.
You're done when
You owe nothing except, if you have one, your mortgage.
Your next step
For education only. Not individual financial, tax or legal advice.