Debt is like the giant black cloud of fright that keeps on looming over your head. There are various avenues of clearing of debts quickly and it all starts with the right planning because without a plan you can’t start from anywhere.
Developing A Financial Strategy:
It is basically a paper or a sheet consisting of an overview of your entire financial picture. A copy of the financial game plan form can be found on our Recommendations page. This form will show you the right path to give you that financial clarity so that you can earn enough to pay off your own debts as well as highlighting those areas where you need to pull back the spending. Once you know your monthly expenses and your monthly income, maintain a written record of those.
This game plan form will aid you to decide at that instant whether you are making enough to pay off your debt and then try to figure out how to pay off those quickly. This simple task as it seems may have been possible by only some rearrangement of the spending or by bringing in more money or it can be a mix of both the ways. This form should be considered as the initial assessment of the situation which will eventually give you a bigger picture to use and to create a more detailed plan to pay off the debts quickly.
Deciding On What To Pay First:
Once you have the idea of how much you owe the strategical part to counter the debts. As a starter, you should start by prioritizing which debts needs to be paid off first, whether it be the credit cards or the education loans or whatever is there based on their interest rates. You can start with the loans with the maximum interest rates at first. For example, if Credit Card A has a limit of 1000 bucks along with a 12% interest rate and another B credit card has 1500 bucks with 6% interest, you will put down a total of 150 bucks every month, which is the minimum payment of 3% on one and putting the rest on the other.
In this way, we will save more money if we pay off Credit Card A faster than the other credit card. Now that you have prioritized, a plan of action needs to be worked upon. In the case of Education or Student loans, it is actually possible to save thousands of dollars every year just by paying the debt a little more than usual every month. For example, if you have a $10000 student loan at an interest rate of 6.8% with a 10-year long repayment tenure, you need to pay only approximately $115 every month to abide by the standard monthly payment.
Monthly Tracking Of Finances:
Effective tracking of finances every month is another very important step to get out of the debt. You have to be intentional about your finances in order to create a solid financial picture. You must restrict yourself from spending money unaccountably because in that way you will always keep on wondering where all the money got disappeared and if you fail to understand where your money is going you will never be able to accumulate enough money to clear off your debts. So, the best way is to create a tracker budget which will help in tracking all the cash inflows at the top and outflows at the bottom. Here, it must be addressed that though many people think that paying bills on time are all that matters, but in reality summation of all these small purchases ads up to a significant amount at the end of each month and you may be surprised to see how much money gets spent on trivial unnecessary matters.
Paying off The Debts With The Extra Cash:
This step cannot be overlooked because by if you keep on paying your debts with whatever extra or unexpected income you are having, it can really boost up the chances of paying off your debts real fast.
Sometimes it does makes sense to opt for refinancing because it is always preferable to pay a lower interest rate than paying over 15% in interest over some old loans. This is very smart tactics and Credible can help you in searching many such lenders who can provide you refinance rates astoundingly low like only 4.99% APR.
So, remember all these steps and eliminate debt and thus live a happy and rich life.