If you or a loved one has ever faced paying off seemingly endless debt, you know how defeating it can feel to not be able to ever get ahead.
Your life can be on pause as you, or maybe your significant other pays off their debt.
Sometimes it’s from a student loan, money you needed while going to school.
Other times it’s from credit cards, it’s hard keeping track of all the payments, their due dates and amounts all while trying to avoid using it and running the balance up once again.
Luckily, there are strategies, tools, and resources to help. Paying down your debt faster may help you get a jump start on achieving your goals.
From submitting an application for a new credit line, to negotiating with the companies you owe, to simply forming a strategy for paying off your debt fast. Below, we’ve compiled a list of tips to help you get started.
Tips for paying off your debt
Consolidate your debts
Debt consolidation means combining multiple, usually high interest rate debts (credit cards), into a single loan/payment. If you can get a lower interest rate than you already have, this might be the best option for you. This may help you organize your debt and in turn, pay it off faster.
If you have a manegable amount of debt, but are dealing with multiple payments, interest rates, all with different due dates, get started with debt consolidation today!
Pay off the loan with the highest interest rate first.
When you approach paying off your debts by prioritizing the loans with the highest interest rates this is called the “Debt Avalanche Method”. To start, list out all of your debts, include the current balance, min. monthly payment, and the interest rate. Sort that list by the interest rate column, with the highest on top. Example
|Name||Balance||Min Monthly Payment||Interest Rate|
|Credit Card 2||$9000||$130||22%|
|Credit Card 1||$12,000||$150||18.5%|
By taking the Avalance approach, you prioritize “Credit Card 2” with the 22% interest rate. If the minimum payment is $130/month, you pay extra on that payment each month until it is gone. Once your first debt is stomped out, you apply the same method to the next debt on your list, “Credit Card 1” using the $130 that you would have paid from “Credit Card 2”, and applying it to your payment.
Try and pay more than the minimum each month.
Paying only the miniumum on your debt has many negative side-effects on you. First, it will take much longer to pay off. Sure, you will avoid late fees, but you will not make any real progress on your debt.
Why is that?
You will end up paying much more in interest charges, often the minimum payment is barely enough to wipe out the interest charge from the previous month. Essentially, you are on a debt hamster wheel with no end.
Use an app or calendar to keep track of your bills and them on time.
Adding a calendar event with a reminder might just be what you need to help keep track of your monthly payments. At DebtElephant, we like adding a calendar event a day before the due date with a reminder the week before. This helps remind us to double check our bank account and make sure we have the necessary funds prior to the bill being due.