Chances are that over the years, you’ve built up some debt. You’re not alone. It has been estimated that the average American household is carrying around $130,000 in debt. While there’s no magic wand that can get rid of your debt, you can take a proactive approach and create a debt elimination plan. Here are some tips to help you pay off your debt as efficiently and quickly as possible.
Make a list of all the debts you currently owe. This should include the balance owed, the interest rate, the minimum payment, and when payments are due. Once you have all of your debts listed out order them by both interest rate and balance owed. This will help you make the decision on how to prioritize them.
CREATE A PLAN
After looking at these lists, come up with a game plan. For many people, they prioritize the debt with the highest interest rate as that will save them more money over time. For others, they start with the lowest balance owed so smaller debts can be eliminated quicker leaving more money towards larger debts.
Anytime you come into some extra money or are able to save money elsewhere, put this towards your debt. For example, if you usually spend $100 on groceries, but end up spending $80, allocate this extra money towards your debt. $10 here or $20 there can make a big difference over time.
PAY ON TIME
Most importantly, don’t miss any payments as this may result in late fees that can cost you additional funds, dragging out the process of paying off debt even more. Looking at the list you made above, take note of all the payment dates. Then either write these down on a calendar, program them into your phone, or set up automatic payments.