How To: Pay Off ALL Your Debts

One of the ways to improve your attitude towards money is to pay all of your debts. This may not be possible to do in one go. However, making it your priority helps finish the payments faster.

Here are some approaches to paying off all of your debts.

Approach 1: ONE STEP AT A TIME

Pay one debt after another. Find the card that charges the highest interest rate and start with that card. Then, go to the next card with the lower amount until you finish all of them.

You can also go the other way around and pay the card with the smallest balance first. When paid off, use the money allotted to pay the card with next smallest balance until you finish them all.

Approach 2: PAY MORE

When paying your monthly dues, pay more than the minimum balance. The smaller your balance is, the smaller the interest will be. It will speed up the payments too.

Approach 3: CONSOLIDATE

Combine your debt so you’ll only pay only one creditor. However, you have to check on what your behavior is regarding debt accumulation.  Even if you’ll be able to pay your debt off, if you won’t cut off the credit cards, you’ll most likely drown yourself in debt again. Unless you plan to stop accumulating debt, consolidation is only a good idea, not the best.

There may be easy access to banks that offer consolidation loans with lower interest rates but remember that in the long run, you’ll be paying more. You can’t keep on using debt to pay debt.

Approach 4: CUT BACK ON EXPENSES

Check your budget and your expenses. See where you can cutback and what expenses you can avoid. All the money you save from doing this should be put into paying your debts.

Also, stop accumulating debt. Stop using the cards and if possible, cut them off.

Decide on what approach best suits you. Choose one that will be easier for you to follow through. Just focus on the goal: financial freedom.

 

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