From the book: Richest Man in Babylon
I've mentioned this book a couple of times before but I really like it and think a lot of people here could get some good ideas / inspiration from it.
This is explained in much more detail in the book but from what I remember the basic course of action for those drowning in debt should be as follows.
Step 1. Go to each of your lenders and get a total of the debt owed, and negotiate with each one to try for either an interest free period or maybe even a reduced total.
Step 2. Make a list of all your debts and calculate the percentage that each debt represents of your total debts.
eg. If you owe:
Then write next to each debt: 90%, 8%, and 2% respectively.
Step 3. Work out how much out of your total income you can afford to pay on your debts. Try to make this at least 10% of your income, but be careful to keep it realistic, so that it's easier to stay consistent.
eg. If you earn $500 per week, aim to spend at least $50 per week on repaying your debts.
Step 4. Of your budgeted debt-repayment amount, split it up in direct proportion to your debts owed.
eg. If you are committing to pay $50 a week on the above debts, then pay:
90% = $45 to creditor 1.
8% = $4 to creditor 2.
2% = $1 to creditor 3.
There are very, very few people that can not scrape by on 90% of their current income. Even if this is a struggle for you and you decide you need 95% of your current income to survive, you should still split the budgeted 5% amount in direct proportion to your debts.
With dollars, this may be impractical to pay small amounts like $1 per week on a $20 debt, however with bitcoin, you can still pay very small amounts economically.
You may feel like the amounts are so small that you should just wait until you have a more substantial amount to repay and pay it all in one go.
I believe this kind of thinking is the downfall of most people's repayment plans. I'm sure there would be very few creditors that would not rather see small amounts repaid regularly, rather than not know when the next payment is coming, if at all.
Anyway, if you've read the book, or even if you haven't, I'd be interested to hear from others who've tried this strategy or would like to try it.