2-3-06
By this point, hopefully you are ready to get rid of your debt.
What you need to do now is make a list of all your debts, including credit card, auto loans, mortgage, home equity loans and whatever else you might have.
Put these on a spreadsheet with the smallest balance to the largest. You should also have a category on how much per month you have been paying on everything.
The extra money you have found available to pay on your debt from tracking your expenses will come in handy here. When the next payments come due, take your regular payment on the smallest debt and pay that amount, plus whatever extra you have available.
Continue making your regular payments on all your other debt. You will need to track the balances per month and also try to avoid picking up any more debt.
Some people say pay the debt with the highest interest rate first, but if you owe say $5,000 on a loan with 18 percent interest, that will take a lot longer to pay that say a $1,000 debt with 10 percent interest.
So I would recommend that you pay off the smallest debt first. This will also be encouraging to you by actually getting something paid off and you will see your efforts rewarded.
After paying off the first debt, when your payments come due again, take whatever you have been paying on the debt you just paid off and apply that amount along with your regular payment on the second smallest debt.
This will create a snowball effect. After you pay off the second debt, apply it to the third debt and continue on until you get your debt paid off.
While you are doing this, continue to examine your expenses to find if there is any other money available to get rid of the debt. Also, if you get a bonus or raise, start using that extra income to pay off the debt.
In a future blog, I will discuss ways to increase your income. One thing I really like about this plan (aside from getting out of debt) is that after the debt is paid off, you can take the money you have been using to pay off debt and start saving that money.
Next time, I will continue discussing ways to improve your finances.
What you need to do now is make a list of all your debts, including credit card, auto loans, mortgage, home equity loans and whatever else you might have.
Put these on a spreadsheet with the smallest balance to the largest. You should also have a category on how much per month you have been paying on everything.
The extra money you have found available to pay on your debt from tracking your expenses will come in handy here. When the next payments come due, take your regular payment on the smallest debt and pay that amount, plus whatever extra you have available.
Continue making your regular payments on all your other debt. You will need to track the balances per month and also try to avoid picking up any more debt.
Some people say pay the debt with the highest interest rate first, but if you owe say $5,000 on a loan with 18 percent interest, that will take a lot longer to pay that say a $1,000 debt with 10 percent interest.
So I would recommend that you pay off the smallest debt first. This will also be encouraging to you by actually getting something paid off and you will see your efforts rewarded.
After paying off the first debt, when your payments come due again, take whatever you have been paying on the debt you just paid off and apply that amount along with your regular payment on the second smallest debt.
This will create a snowball effect. After you pay off the second debt, apply it to the third debt and continue on until you get your debt paid off.
While you are doing this, continue to examine your expenses to find if there is any other money available to get rid of the debt. Also, if you get a bonus or raise, start using that extra income to pay off the debt.
In a future blog, I will discuss ways to increase your income. One thing I really like about this plan (aside from getting out of debt) is that after the debt is paid off, you can take the money you have been using to pay off debt and start saving that money.
Next time, I will continue discussing ways to improve your finances.
posted by Craig Hall | 1:31 PM
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