Are you up to you eyeballs in debt? Are you tired of letting debt consume you? The truth is that you're not alone. Debt is something that 80% of all American's have to deal with each and every day. We want to help reduce this number and increase the financial health of those 262,560,000 Americans.
When considering how to pay off debt, most people consider the interest percentage. "Pay off the highest interest debt first!" That may seem productive, but in the long run, that's not what will make the largest difference in your financial life. The idea is to get out of debt as fast as you can without incurring any further debt along the way.
You should pay off your debt by smallest amount to the largest. The reason for this is motivation and quick results.
Let's see an example.
You have $1,000 in credit card debt, $2,500 medical debt, and a $35,000 car debt. Notice the lack of interest. The idea is to throw as much money at the smallest debt as possible.
Once the $1,000 payment is out of the way, you feel accomplished and think, "this isn't so bad!" This motivation spark intentional behavior and will make you want to see the rest disappear.
Now, you will only have two payments instead three. Therefore, more money can be thrown at the second one instead of dispersing funds. Dispersion of funds is slow and unproductive compared to this method of paying off debt.
Before paying off your debt, it is important to have a budget. We recommend using the EveryDollar website, and app, for quick and easy budgeting. Additionally, we encourage you to have a $1,000 emergency fund in place to ensure that you do not go further into debt while attempting to get out of debt.
For any questions regarding getting out of debt, please feel free to contact us!
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