While making the decision to pay off your debt is one of the first steps to achieving that goal, figuring out which debt to prioritize first, can be a real puzzle.
Instead of getting stuck on what method to use, when tackling a mix of revolving lines of credit and installment debt, apply these three steps to craft your debt pay off strategy.
1. Write Down All Your Debts
Before you start throwing extra payments on your debts, it’s important to get a comprehensive picture of your debt obligations. Make note of the amount of debt, the lender, the interest rate and minimum payment amount due.
2. Calculate The Daily Cost Of Your Debts
Get a good understanding of how much each debt costs, daily, based on the terms and conditions relating to the interest rate, billing cycle, and the size of the outstanding principal balance. This will help you clearly identify and rank debts from most costly to least costly.
3. Choose One Priority Debt To Start
More important than choosing and sticking to one method, is to pick one priority debt to pay off, once you’ve budgeted for the minimum payments of the other debts. Try making extra payments on the debt that annoys you the most first, and use the satisfaction of paying it off, sooner to keep you motivated to keep your debt pay off momentum going.
Related Article: How I Paid Off $13,000 of Debt in 13 Months
Read more about crafting your debt payoff strategy and a few more things you should consider in the original post, over at CleverGirlsKnow.com.
~ Melisa Boutin