Do you have an outstanding debt hanging over your head? Whether it’s student loans, credit cards, car payments or any other type of debt, it’s costing you money! And if thinking about debt keeps you up at night, it’s likely causing you a lot of extra stress as well. But here’s the thing: once you make paying off debt a priority, it can often be easier than you think. Here are some tips to help you get your debt paid off. Sometimes, we may just want to stash those bills away and never look at them. However, the one big key to paying off your debt is knowing where you are. Take out all of your bills and list your debts from the smallest to the largest. Then, list them in order from the highest interest rate to the smallest interest rate. Since the one with the highest interest rate is costing you the most money, that’s the one you want to pay off first. Before starting to really pay off your debts, build up a small emergency savings fund of at least $1,000 for any unexpected expenses or bills that could pop up. Think about car repair, medical bills, school, etc. This is your “rainy day” fund, or money you tap into when something unexpected happens. If you do have an emergency and need to use some money from your fund, build it up again before paying off more debt. Still, be sure to still pay minimum payments on your credit cards and other debts. You’ll want to be sure to always pay your minimum payments on time for every debt you have. This way, you will avoid paying higher interest and late fees. So, if you’re trying to pay off the highest interest rate card first, put more money toward that card each month, while continuing to make the minimum payments on all other debts. Then, move to the next highest interest rate card and so on. If you don’t already have a budget, putting one together is a great idea. The idea of budgeting might conjure up feelings of lack or scarcity, but in reality, budgeting is just a simple way of you telling your money where you want it to go. A good place to start is to take a look at your last month’s expenses from bank or credit card statements. To organize your expenses, you could use a paper budget, an Excel spreadsheet or an app. You’ll want to create categories for each expense in order to set a limit for each one, and also list your income. Be sure your budget never exceeds your income. If it does, there might be some items you’ll need to cut. Once you’ve listed out all of your debts from the highest interest rate to the lowest interest rate, start paying as much as you can each month toward the card with the highest interest rate. Then, once that debt is paid off, apply what you were paying toward that debt to the card with the second-highest interest rate and so on. This will save you the most money over time. Once the debts start to disappear from your list, you’ll be able to gain more momentum and stick to your plan. You’ll be able to finally see the light at the end of the tunnel once you’ve paid off the first debt. You’ll feel accomplished and encouraged to take on the next one! Be sure to check out Getting your Debt Paid Off – Part 2 to get more tips on getting your debt paid off!
10 Tips to get your debt paid off ASAP – Part 1
1) List debts by interest rate
2) Have an emergency savings fund
3) Always make minimum monthly payments
4) Create a budget and remove any extraneous items
5) Gain momentum by laddering your debts
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