Debt can come in many forms. The amount of debt you have is not important; the fact is that you need to get rid of it immediately so you will not run into any future problems. But how do you go about getting started?
Here is a simple and easy follow plan on how you can pay off your debt quickly:
Record all the debts you currently have: Whether it's credit card loans, personal loans, or student loans, make sure that you list all of them, including the interest rates. If they are not listed, then there is no way you can come up with a plan to reduce your interest rates.
Prioritize the debts: Put them into three categories. The first group is those that have high-interest rates or penalties for not paying on time. Those should be paid off as soon as possible. The second group is those without high-interest rates but those that usually have a penalty for not paying on time. The third group is those debts that have extremely low rates and no penalties. Those should be paid off last, so you can save money by putting them off for as long as possible.
Start working to pay off the first category: Put all your effort into getting rid of the first group of debts. Prioritize working on the debts with the highest interest rates first to pay off first.
Once that is paid off, then work to pay off the second category: Make regular payments towards your smallest debts until they are all gone. This step can help you to start saving money by not having so many monthly payments.
Once you have finished paying off these two categories, then start to pay off the third category: Now that all your debts are paid off except for low-interest rate loans, it would be beneficial to continue with making regular payments until they are also gone. This will allow you to experience fewer monthly payments, which in turn gives you more money on a monthly basis to save or invest rather than spending it on debt repayment.
The reason that this is the best plan for paying off your debts quickly is that you are still able to manage your money by not reducing all of it to just one category. If you do this, then you will find yourself putting more towards debt than necessary which could suffocate your financial growth. You will also find it difficult to live your normal, daily life since you are not able to do anything without first putting money towards the debt. However, if you follow this plan, then it is possible for you to experience a lifestyle of debt-free living within the next few years.
Posted Using LeoFinance Beta