Personal Finance and Investing

Throwing away your bills and shredding your credit card payment reminders simply is not going to make the problem go away. Debt is going to hover over you until you find a way to deal with it. Interest will continue to compound, and payments will continue to climb until you are in debt up to your eyeballs with no apparent way out. Luckily there is a solution – These 9 steps will have you paying debt off in no time.

1 – You need to pay more than the minimum balance on your debt accounts in order to pay them off. The first thing that you are going to want to do is to break the habit that you have of only paying the minimum required balance each and every single month. The minimum amount due is typically only 2% to 3% of an outstanding balance, and paying this minimum amount is really only going to prolong the amount of agony that you experience. This is actually what the banks are hoping that you will do – The longer that it takes for you to repay all of the charges, the more interest they are going to make in return. This means less cash in your pocket overall, so why are you doing this? Stop playing the selfish game that the banks are goading you into and start taking control of your debt.

Solution: Bite the bullet and start paying off as much as possible each and every month. If the minimum amount that you need to pay is $100, then double that amount and find a way to pay $200 dollars or more if you can. Examine the expenses that you normally have and cut something back to find a way to get the money that you need. There are plenty of ways to live below your means for a while so that you can pay off your debt finally.

2 – You need to follow the snowball method when it comes to paying off your debt. You should take a long and hard look at all of your credit card accounts. Which ones have the lowest of the interest rates? Have you managed to max these cards out? If not, then consider transferring bills with higher interest rates to credit cards with lower interest rates. Many credit card companies allow this, and trading larger debts for smaller ones is always a good idea.

If the entire balance on the larger card is much too large for the smaller card, then pay at least what the minimum amount due is on all of the cards you have except for one. Funnel most of your debt repayment onto that one card, paying it off as quickly as you possibly can. When the balance on that particular card has reached zero, then move on to the next card using the same aggressive plan for repayment.

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