Debt Free Life
Are you locked in massive debt? Creating your own personal debt elimination is simple. There are a number of things you can do to set yourself free. One, set a monthly amount. Two, pay minimum amounts and three, pay extra money toward the debt with the highest interest rate.
These will ensure that you pay the least amount of interest and repay your debts as son as possible. The trick to paying the least amount of interest is to pay extra money toward the debt with the highest interest rate. Obviously, you want that debt paid off as soon as you can because each month it costs you the most. The trick to paying off your debts in the least amount of time is to set a fixed total amount to pay each month. The trap many people fall into is that they only pay the minimum payments.
These minimum payments are designed to keep you paying that high interest rate for long as possible. By paying a fixed total amount each month, as one debt is paid off you will have more money to pay towards another debt. This is often called the “snow-ball” effect. But first things first. Determine your ability to pay. If your total payments are much more that you can afford, you are in trouble.
Next you need to make a commitment t stop getting further into debt, cut up our extra credit cards or put them where you cannot easily get them. If you are living a lifestyle that depends on credit, you will soon dig a hole you cannot easily climb out of. Stop spending more than you make each month and don’t commit on future bonuses, inheritances, refunds or other non-dependable income to bail you out.
Look for ways to out back purchases you can postpone or do without. Now, let’s look at each step of your ultimate debt reduction plan more closely.
Firstly determine how much you can afford to pay each month toward your debts. At the minimum, it should be the total of all your minimum payments for the current month. You may need to examine your spending for the last several months. Find things you can eliminate or do without for a while. Postpone purchases or anything to free up more money to pay your debts. You may each want to postpone investing for a while. If not, a better investment would be to repay your debts. Once you have your monthly debt repayment amount set, you need to write down each monthly debt you are paying. Record the creditors name, the current balance, and the interest rate.
Then take a separate sheet of paper and reorder the debts so that the debt with the highest interest rate is at the top. As each monthly bill comes in pay the minimum payment. Subtract the minimum payment amount from your set monthly total. After all the bills are paid for the month, take any extra money left over and make another payment on the debt at the top of your list. You can make an additional payment this month or save the money to ad to next months bill. But don’t spend it! As each debt repaid, cross it off your list but keep paying the total monthly amount you set at the beginning. This will accelerate your debt repayment and save you hundreds or even thousands of shillings in interest charges.
The two keys in your ultimate debt eliminations plan are stop getting further into debt and set your monthly debt repayment amount. The rest is easy. You will be debt free before you know it. But the success your debt repayment plans surely depends on your willingness and readiness to take the advice as the sacred truth and regularly following it. Any deviation from it will always lead to frustrations.