Paying Off Debt the Easy Way
Are you struggling to pay off debt? Are you watching your balances increase with no real plan for taking control of your finances? If that sounds all too familiar, there’s still hope! Try these strategies for paying off debt.
Step One: See How Much Debt You Really Have
For many people, debt is scattered across a variety of accounts that you simply know you have to pay off every month. Take a real, hard look at your debt: student loan debt, your car loan, credit card debt, even your mortgage. Then, ask:
- How much are you really paying each month?
- Which interest payments are highest?
- How much do you owe on each of your debts?
Once you’ve got a better look at exactly what debt you’re dealing with, you may be in a better position to start dealing with it.
Step Two: Choose Your First Target
If you’re ready to pay down your debt, don’t go into it without a strategy! Instead, create a plan. In order to maximize your efforts, choose one debt to pay down or pay off first. This might be the debt with the highest interest payment, the smallest debt (to check one off and allow you to move on to the next one), or a debt that you specifically want to discharge for another reason. Choose the option that makes you motivated to keep moving forward.
Step Three: Commit to Paying More than the Minimum
If you only pay the minimum amount on each debt each month, chances are, you’re going to be paying on it for a long time. For an American carrying the average credit card debt of $15,000, for example, it will take around 11 years to pay off that debt by just sticking to the minimum.
Instead, commit to making extra payments on your debts each month. Start by looking for ways to cut expenses. You might, for example, be able to cut out your gym membership, cancel a few streaming subscriptions, or eat out a little less per month–whatever it takes to help you send more money toward paying off your debt.
Step Four: Pay Off Your First Debt and Keep Going
Completely paying off your first debt is an empowering feeling. It may take weeks, months, or even years. When you finally pay it off, however, there’s an incredible feeling of relief. Don’t let it stop there! Immediately roll the payments that you were making for that debt into another one. You won’t notice the difference in available funds each month, and you’ll be able to pay down your next debt faster.
Step Five: Commit to Staying Out of Debt
As you’re paying down your current debt, commit to avoiding new debt. Put away your credit cards and only use them for emergencies. Avoid taking out loans that you don’t need. When you do, you’ll quickly discover that this new, freer way of living is much easier to sustain than a constant cycle of debt.
Learning how to pay down debt isn’t an easy process. Without debt in your life, however, you’ll discover that you get to control your finances, instead of allowing them to control you. Are you ready to pay down your debt and improve your financial standing? Get started today!