Nobody wants to be buried under a mountain of debt but unfortunately, if you get hit by unexpected bills or your earnings aren’t high enough to cover all of your basic living costs, you might end up having to borrow money. You’re already in debt, you can’t go back in time and change that so now you just have to look to the future and start trying to get out of it. Those monthly interest repayments are eating into your budget and putting you in more financial trouble so getting rid of debt as quickly as possible is the only way to secure your finances properly. If you just pay the minimum monthly repayments, you’ll be stuck under that mountain of debt for ages. You need to use these tips to clear that debt as quickly as possible.
Focus On One Debt At A Time
When you’re trying to clear all of your debts quickly, you’d be forgiven for thinking that you should pay off all of your separate debts at once. In reality, that’s actually one of the worst mistakes you can make when trying to get out of debt. When you pay off a debt, you no longer have to pay that interest. That’s why the cheapest way to pay off debts is to start with the most expensive one (the one with the highest interest rate) and get rid of that. Then work your way down to the cheapest ones. You’ll save yourself a lot of money and you’ll get out of debt quicker doing it that way.
You might not even have to pay off debts in order if you can consolidate them instead. It’s not always an option but you should look into it. The best consolidation loans will combine all of your debts into one single repayment. It’s a good way to avoid high interest loans and it’ll make it a lot easier to manage debts if you only have to deal with one payment rather than 5. You’re also paying less money back because you don’t have to cover the high interest rates on those expensive loans.
Pay As Much As You Can Afford
Credit card companies want you to pay the minimum amount each month so you end up giving them the maximum amount of interest. You shouldn’t give them what they want, instead, you should pay back as much as you can afford. When you pay the minimum, you’re mainly paying interest and only clearing a tiny amount of debt. But if you increase those payments, you’re taking a big chunk out of the debt each month.
If you’re lucky enough to get a big bonus at work or a tax repayment, you might be tempted to splash out. You can do that in the future but right now, it’s not sensible. That big lump sum is a good opportunity to pay off a massive chunk of your debt in one go.
Follow these steps and you’ll be able to pay off your debt and get rid of all of those money worries as soon as possible.