Learn how you can pay your debt off faster and start to build wealth efficiently throughout your lifetime…
In the current economy many are contemplating ways that they can pay off their debt effectively and more efficiently. Many are over-thinking their situation and remaining idle or are moving forward at a snails pace.
The real key at this time is determining if you are truly motivated to pay down or pay off your debt, and if so–putting together a debt payoff or debt pay down plan that you believe in and will get you the desired results.
There are many approaches that you can take to pay off your debt such as the debt snowball approach where you attack the smallest debt and go to the largest, debt avalanche approach where you attack the highest interest rate and move to the lowest interest rate along with many others that are too numerous to discuss at this time.
It is important that you realize that the real key to paying off or paying down your debt is determining “why” you want to pay off or pay down your debt and then making a real commitment to focus in on a consistent basis according to a plan that works for you and your cash flow position.
Do you desire to save time and interest by using the debt avalanche approach or do you feel more comfortable eliminating debt faster but paying more in interest overall by using the debt snowball or some other method?
Many of those who now have credit card debt and other revolving or installment debt are looking for creative and highly effective ways of paying off their debt. And even though we are in the COVID-19 era–NOW may be the time for you to start on your debt payoff or debt pay down journey.
In many cases, the simplest and most effective path is paying off the smallest (the one with the lowest balance) debt that you now have and then working your way up to the tallest ((the one with the highest balance) debt that you owe.
Conceptual Understanding
Keep in mind that there are many other ways to pay off your debt and this strategy may not be right for you, but is one worth at least considering.
Even so, you still want to know that in case of a financial emergency you will find yourself in a comfortable position to still be able to pay off your debt.
In this discussion TheWealthIncreaser.com will detail ways that you can pay off your debt and at the same time build a better future for yourself and your family—in the current economy.
If the amount of debt that you owe is at a high level and it looks difficult to pay off or pay down at this time—it is ok if you are outraged at your past behavior—however you must leave anger behind as it has the potential to slow down your progress!
Your outrage (motivation) at this time can get you on a path toward major debt payoff and turning your finances around and achieving meaningful goals.
At this time TheWealthIncreaser.com will discuss ways that you can pay off your debt that will force your mind to take a more visual look at your debt that could lead to you becoming more inspired to pay off or pay down that debt in a more timelier manner so that you can enjoy life on your terms.
Let’s now look at how you can reduce your debt efficiently at this particular point in your life.
Smallest to Tallest Credit Card Debt Payoff
By starting your debt payoff method by looking at what you owe from a comprehensive perspective (analyzing all of your outstanding debt) you can put yourself in position to come up with a more efficient debt payoff or debt pay down plan.
By knowing your monthly income (and outlining your total debt that you have at this time) you can put yourself in real position for real success throughout your lifetime!
It is important that “you” know your current balances on all of your outstanding debt and your interest rates along with what you spend based on your standard of living on a monthly basis.
Assuming your credit card and other monthly debt are as follows:
Credit Card 1 $1,560–minimum payment $30–17.99% interest rate
Credit Card 2 $1,970–minimum payment $30–13.99% interest rate
Credit Card 3 $2,460–minimum payment $50–20.99% interest rate
Credit Card 4 $3,975–minimum payment $70–11.99% interest rate
Auto Loan $1,260–payment $300
Mortgage $115,600–payment $800
Utilities and other monthly expenses including auto and mortgage were $1,800 in total:
If your income on a monthly basis is now at $2,500 you would have $700 ($2,500 minus $1,800) to apply toward your credit cards and other debt on a monthly basis. By paying the minimum amount on credit cards 2, 3, and 4 ($150) and an additional amount of $550 on credit card one you would eliminate credit card 1 which has the smallest balance in 3 months and move along to credit card two that has the second smallest balance.
You now have $550 that you were paying on credit card one and $30 that you were paying on credit card two ($580 total) to use to pay off credit card two and in just over 3 months from the time of paying off credit card one–or 6 months from your debt payoff start day credit card 2 would be paid off.
You now move to credit card three and you now have$580 plus the $50 ($630 total) that you were paying to credit card 3 to pay off credit card three in about 4 months from the payoff of credit card 3–or 10 months from your debt payoff start day–and credit card 3 would be paid off.
You would then have $630 that you were paying off for credit card three to apply to credit card 4 that you were paying $70 per month to pay off–meaning you would have $700 after 10 months of paying off your credit card 1, 2, and 3 to apply to credit card 4 (your tallest credit card debt).
Therefore, at a payment of $700 per month in less than 6 months credit card 4 would be paid off and you would be in position to use the $700 that you now have available on a monthly basis to properly establish an emergency fund if you have not done so, establish an education savings account for your child, pay off or pay down your car payment or mortgage payment more aggressively, save more aggressively for retirement or pursue other goals that you may have.
By using your motivation, an effective action plan and putting forth the required effort– in 16 months from the start of your debt payoff journey you would have all of your credit card debt paid off and you would be in a better position for lifetime success!
If your income was at $5,000 per month you could do even more by paying off the above debt even more aggressively,
If you lacked the income at this time (say your income on a monthly basis was less than $1,900) you would have to get more income, cut expenses or do a combination of the two.
If your debt payoff under the best of circumstances would take 4 years or more bankruptcy should be given real consideration “prior to” depleting your savings, retirement and other accounts.
That is why you must “at this time” determine ways to increase your income or cut your debt level (or do a combination of the two) so that you will not overthink your situation, remain idle, or make bad choices by not seeing a realistic way out.
You now know that you can achieve optimally during your relatively brief stay while here on earth, however it is your responsibility to get the ball rolling and stay committed even when adversity occurs.
Conclusion
It is not only important, it is imperative that you come up with a plan to reduce your debt or save more aggressively so that you can reach your desired goals.
By making a decision at this time “you can put yourself in position to control your future” as opposed to having credit control your future.
You can lead your family and loved ones on a positive journey where success lives!
All the best as you journey toward a lifetime of success and pay off your debt from smallest to tallest or in any other manner that you see that will work for you and your family…
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