Are you sick of your debts? Thinking how to pay off debt fast I am showing you below how to do that But I want you to think for a moment
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What made you fall in debts in first place Are you over spending on luxury items? Because you want people surrounding you To see you in a good way
You cannot handle criticism so You try to show off to avoid people making fun of you Perhaps you spend money on your friends Buying them a lot of gifts just to plead them You want them to stay around you
I don’t want you to pay off your debt Then fall again in another one You have to find the cause first and work on Fixing this issue then pay off your debt
When I got married in 2010 I had to buy a whole new things for my condo I knew I will be in debt but I had control over it What made things worse I got laid off and Me and my wife were living on a single income We managed to get rid of our debts quickly
I am willing to show you how to pay off debt fast Let me list below what you can do to pay off debt Get back on track as a debt free person
1) Make a list of all your debts
You start by creating an excel sheet List all of your debts on the left as rows Create columns for your debts to include for each debt Minimum payment, interest rate and total amount you owed
Now you can rank your debts based on highest rate Target to pay these debts first Also if you can manage to pay small debts to cross them out of your list This will motivate you and keep you focused on big ones
2) Set your budget
To setup a good balanced budget You have to review all your credit cards history You got to analyze your spending
Some expenses are fixed like rent or mortgage you cannot control them While other expenses are fluctuating like utilities, groceries and gas Track all the fluctuating expenses Try to come up with reasonable and moderate budget for all these expenses Do that based on average of ups and downs
I tell you that so you don’t track your expenses during holiday Which are considered high and apply them all year round Once you set a realistic budget Bring envelopes and label them with the expense name
If you are paying some expenses using Authorized credit cards payments Then don’t label envelopes for them
There is a free app which is called Goodbudget for Android and iPhone
3) Set your goals and plans
Do you have a plan on how to pay off debt fast Have this plan written somewhere in your home Check it daily and track your progress on the same sheet Without goals it will be hard to stay on track
Set a due date on how you will finish one debt If you manage to pay one debt successfully on time You will be very excited with your small progress It will boost your enthusiasm to keep you paying more into your debts
4) Pay with cash
Stop using credit cards Although some cash back credit cards rewards you on your purchases Problem is with you using your credit cards
If you cannot control spending on your credit cards Leave them at home Only bring your debit card with you for emergencies
5) Lower your spending
Cut fast food and dinning out You have to endure some sacrifices
Stop buying what you want Get only what you need
There are so many things to cross from your buying list and Still put its money to pay your debt Like buying new clothes, accessories and shoes
If you stop your daily drive thru coffee You will save around $15$ to $20 weekly
Just a thought that came to me Open a new saving account if you don’t have one Imagine paying for your coffee and Pay its amount to your saving account Pay the accumulated amount at the end of each month to one of your debt
6) Pay more for debts with high interest rate
Pay high interest rate first as You don’t want accrued interest to get accumulated Your plan is to pay less in term of interest charges
At the same time some people debate to pay The smallest balance to keep you motivated I would say pay the small balance for one debt That can be paid in one or two months While still paying most of your payment into the highest interest debt
7) Finish paying lowest balance first
If you have 2 similar debts with equal interest rates Finish first the lower one to give yourself a relief
Although I mentioned above to pay the debt With the highest interest and now I tell you to Pay lowest balance first, you get confused Actually this is a debate
In my opinion if you have a small balance That can be completed in one or two months I would share the monthly payment between Paying the 2 debts with highest interest rate and lowest balance
I will give an example with numbers here If you have debt A for $11,000 with 19% interest While debt B for $600 with 5.5% interest If you are committed to pay $800 monthly I would allocate $300 towards debt B While paying $500 towards debt A In 2 months I will finish debt B and move to debt A
8) Double up on payments
If you finished paying one debt like paying one credit credit in full Congratulations and keep up the good momentum Allocate the same amount towards another credit card To accelerate finishing it faster
Any extra payment will go towards your principal Make sure you are not paying just the interest Your payment has to cover the interest plus part of principal If you pay only the interest unfortunately You are not decreasing your loan or credit card
9) Pay down debts using bonuses
Whenever you get year end bonus or Tax income coming from your tax returns Take all the money and put it towards your debts
Also most of us get paid biweekly This means in any fiscal year You have 2 extra payments Look at your calendar and check all the paychecks Usually it is Fridays and see When you will get the next extra paycheck You can use it to pay more into your debts
10) Pay more than the minimum payments
It will take you forever if you are paying just the minimum I have one of my credit cards on its statement It has a statement under the balance that says If you pay the minimum only It will take your 9 years to pay all your balance This amount is less than a thousand
It is completely insane to pay minimum only Doing that you will be paying the interest
11) Get rid of extra things by selling them
Check around your belongings from electronics to furniture There are so many things you can sell and still feel you didn’t lose much
There is nothing wrong about that Don’t take it personally and get the feeling that you went broke I managed to sell toys that are in good condition
If you have 2 laptops but only use one You can sell your items on Facebook Marketplace In your nearby community or you can sell your items on eBay But eBay requires extra skills to learn how to create a listing
12) Cancel unnecessary subscriptions
I remember I looked one at PayPal subscriptions I found 2 unused subscriptions Which I cancelled right away
Most credit cards statements have beside All transactions an icons to indicate If a transaction is a recurring type Go through all your recurring types and see what you can get rid off
What about your cable You can switch to free or paid online streaming service What about your GYM membership and yard maintenance
13) Lower your mandatory subscriptions
For all mandatory subscriptions like cell phone plan Check if you are paying for extra services and not using them or Paying for a service but using part of it Like paying for 10 GB of data When you are not using more than 3 GB monthly
You can save good money If you apply this on all mandatory ones
14) Focus to be satisfied with what you got
To be satisfied you have to stop comparing yourself to others Don’t look on what they got and you don’t What they got should not concern you Also practice doing these things in your life
Write down your daily gratitude You have to recognize all the good things You got in your life each day
Be flexible and accept change in your life One in a while always think about people’s point of view Try to think about it and accept it
Look at things in new perspective Turn any negative situation into a positive one Perhaps being in debt will teach you to live frugal life I mentioned earlier to look for the cause of What got you into debts in the first place
15) Avoid new debt
It doesn’t make sense to create new debt While you still paying your current one If you plan to buy a new car You don’t need to that Used car will also do the work for you
16) Analyze your shopping habits
Sometimes you need to think What makes you spend money If you find that you hang out with your friends and This triggers you to spend money Now you know the cause
Remember I am not trying to make your life hard At least you should have fun But find a way to limit the habit that makes you spend money
Also check your credit card statements See if you can spot any extra thing to stop buying
17) Find a way to increase your income
If you increase your income You can pay your debt fast There are so many ways online to make an extra income Check how to make an extra $200 in one day
18) Volunteer for a good cause
This will help you feel how lucky you are with what you have It will also help you save money especially If you hang out with your friends a lot
Also if I cannot ask you to denote or I will be insane I would ask you to denote from your health By doing service in charities
19) Overcome your addiction
If you are a smoker or you buy alcohol a lot It is now your decision to stop your addiction and Save money towards paying your debts
If not, think about your addiction from different perspective Some people are addicted to buying clothes especially shoes I know a friend who is really addicted to buying watches
If you stop your addiction You will get self satisfaction that You have done your best to fight your debts
20) Focus on your needs and not your wants
You have to differentiate between What you need and what you want Forget about your debts now Just focusing on chasing your wants This will drop your level of happiness As you feel deprived
If you want to be happy Focus only on what you have
21) Learn basic money management and investments
You have to understand the basics Like the bad effect of compound interest How to calculate the matured value of initial money after investment I see lot of people they don’t understand those basic money management
Number one problem with any people under debts They don’t believe that they can be debts free one day Usually because they have low income
Getting despaired will make you lose hope If you lose hope you will not be able to overcome your debts
23) Speak to a credit counselor for free
in US and Canada There are free credit counselor offered by the government You can listen to their advice Don’t assume you know everything Always there can be few things You are not aware of
24) Get a consolidated loan
Sometimes credit cards send regular mail Offering you to get use of low interest rate for up to 9 months or even a year This is considered a very good change to transfer all of your credits from other credit cards You will be able to consolidate into one card This will motivate you to pay your debt faster as you will be paying more on principal than interest
25) Refinance your mortgage
If you own your home You still has a good opportunity to apply for home equity loan with low interest rate You pay all of your credits and then work later to pay this line of credit
The idea is to get all debts under low interest rate It happens that home equity loans are the lowest rates
26) Save on groceries
You still can save a lot of money on grocery You never imagine how much you can save All savings should be applied to your debts
What to do after you pay off debt fast
The feeling of overcoming your debts is completely joyful You restore your confidence back First thing you think about is You don’t want to fall in debt again Start with the following precautions to avoid falling in debt
Avoid buying things that stretch your budget
Keep track by using an excel sheet for all your credit cards balances weekly or biweekly
Don’t miss credit cards payments
Pay your credit balances in full
Limit the number of credit cards you have
Create an emergency fund and save for US 401K or Canadian RRSP
I hope I really helped you to know how to pay off debt fast, share it with those you feel can benefit from reading this by clicking on the social media icons to the left or down below on mobile
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