Chipping away at your debt can feel like a never-ending task. You pay what you can when you can, but it never seems to make much of a dent. Unfortunately, trying to scale your mountain of debt all too quickly becomes frustrating and can leave you feeling a little hopeless. You might feel like being debt free is a pipe dream.
Nonetheless, by taking things one step at a time and taking your debt on strategically, you can be debt free faster. Here are some ideas to help you be strategic about your debt payments so you can be debt free sooner rather than later.
1. Don’t Create New Debt
This may be easier said than done, but if you’re ever going to be debt free, you have to stop creating new debt. More often than not, debt is created because we tend to live outside of our means. Maybe that’s not you. Or, maybe it is. Regardless of the reason, do your best to put a stop to it. Make a commitment to budget, stick to it, and resist the urge to use your credit cards.
2. Organize Your Debt
Paying a little here and there on all your debt, will feel never-ending. Instead of miscellaneously paying extra toward your debt, take time to organize it in a more strategic way. List out all your debt and rank it, not by amount, but by interest rate. High interest rates mean more money in the long run, which is why that with the highest rate should be your focus.
3. Budget Strategically
Once you’ve figured out what you need to pay first, creating a budget to pay accordingly is essential. Create a solid budget to stick to that includes all your necessary expenses, as well as a little for fun, and of course, a category dedicated to paying debt. Figure out how much to a lot for the minimum payments. Then, decide how much more you can afford to put toward your debt to pay it off faster.
4. Pay Depending on Rank
After you’ve ranked your debt and found the additional amount you can pay, all you have left to do is, well, pay. Always pay the minimum for all your debt accounts, but put the extra debt fund towards your debt with the highest interest rate. Keep doing so until that account is completely paid off. After which, move on to the debt with the next highest interest rate, and so on, and so on.
This method may seem simple, and it is. Nonetheless, paying off your debt this way still does so in a more strategic and smart way. It enables you to focus on the accounts that have the ability to have the biggest impact. This keeps you from getting buried further and further into your debt. This approach may not work for everyone, and at the end of the day, you have to find the best solution for your situation. Still, if this does work for your finances, you could find yourself debt free before you know it.
Do you have a method to paying off your debt? What’s another method you’ve found helpful?- Kayla