In order to eliminate debt, you must consistently spend less than you make, not incur any new debt, and make payments towards reducing your existing debt. To do this, you need a spending plan or a budget. Maintaining a budget can be a daunting task- tracking purchases, manually recording transactions, balancing several different accounts, etc. The list goes on and on. In our near cashless society, it�s harder than ever to keep track of every purchase. It doesn�t have to be difficult though, by using advanced computer technology, it�s easier than ever to create and maintain a spending plan that will help you quickly eliminate your existing debt, and avoid incurring any new debt.

The best way to eliminate debt is using the Debt Roll-Down Method partnered with your Envelope Budgeting System. The debt roll-down principle works by determining the total monthly payment you can make toward debt repayment. Each time you pay off a debt, you add the payment for that debt to the monthly payment for the next priority debt. This will accelerate the rate at which this debt is paid. When the second debt is paid, you add the payment you have been making on this debt to the monthly payment for the third priority debt. This process is continued until all debt has been eliminated. The key is to continue making the same aggregate debt payment each month. Following this debt elimination principle can often assist you in eliminating all of your debt, including your mortgage, in as few as seven to eight years.

There are two ways to prioritize debt repayment: smallest outstanding balance to largest outstanding balance or highest interest rate to lowest interest rate. Because, in most cases, you will eliminate your debt faster if you begin with the debt carrying the highest interest rate, most financial advisors agree you should prioritize your repayment based on the interest rate�highest to lowest.

Traditionally, many people managed their money by dividing their cash into several paper envelopes. An envelope for food, entertainment, utilities etc. They then spend their money from these envelopes. They always knew how much money they had left, and how long it had to last. Today the best way to create and manage your Envelope Budgeting System is with the online budgeting system Mvelopes Personal. Mvelopes Personal is a breakthrough in budgeting and spending management that modernizes this same envelope budgeting concept using advanced Internet technology.

You can quickly set up your rapid repayment plan by following these steps.

STEP 1: Create a list of all debt.
The first step is to create a list of all debt. This list should include the name of the debt, the current outstanding balance, the planned monthly payment, and the interest rate for each. Begin with the debt having the highest interest rate and end with the debt having the lowest interest rate.

STEP 2: Check your monthly spending account allocations.
When you set up your monthly spending plan, you should create an envelope spending account for each debt on your list. Each month, you will make your debt payments from the spending accounts you have created. After you pay off the first debt, you will need to make an adjustment by adding the monthly allocation for that debt to the monthly allocation of the spending account for the next priority debt.

For example, let�s say your debt with the highest interest rate is a department store credit card. The amount of your monthly payment for this debt is $75, so the amount of income you allocate each month to the department store spending account for that debt is $75. Your next highest priority debt based on interest rate is a credit card. For this debt, your monthly payment is $125, so the amount of income you allocate to this credit card spending account each month is $125. After four months, you have paid off the department store debt. When you complete your monthly adjustment, you will transfer any remaining balance from the department store spending account to the credit card payment envelope. You also will adjust the monthly income allocation for the credit card spending account by adding the $75 to the $125. You will now be making a monthly payment of $200 on the credit card. This will be repeated each time a debt is paid off. Before long, you will have eliminated all of your consumer debt and will be making much larger mortgage payments.

STEP 3: Accelerate your debt payment with monthly spending account transfers.
Once you have created your debt-elimination plan, you can begin to accelerate your debt repayment by transferring savings from your spending accounts to your debt repayment accounts. Many people have found they can save an additional 10% each month by using an envelope system. If you have a net monthly income of $5,000, the additional amount you can save using the envelope system could be as much as $500. Imagine how quickly you can eliminate your consumer debt if you are adding 10 percent of your net monthly income to your debt payments.

For most people in America, a significant portion of their net monthly income is dedicated to the payment of interest. Imagine how much money you can save and invest if you are not paying interest. For most, this would represent several thousand dollars each year. Invested properly, this additional money may make a significant difference in the lifestyle you choose later in life. Using an envelope system to successfully implement the debt roll-down principle will help you accomplish this objective.

With Consumer debt at an all time high, it�s no wonder more and more people are looking for help with personal financial management, debt reduction and spending management. And given the substantial debt carried by the average family, it�s not surprising that Financial Freedom is at the forefront of the American mind � Among the top New Year�s Resolutions for2004 were increased savings, debt reduction, and increased investments.

Following the steps outlined in the Debt Roll-Down method will put you on the right path towards eliminating all of your consumer debt. If you partner this with your envelope budgeting system like Mvelopes Personal, you too can reach financial fitness � regardless of your income level. The amount of money that you earn isn�t what matters, its how you spend the money that you do earn. You simply have to spend less than you make on a consistent basis.