How to Pay Your Debt Down
Paying down your debt can take a great deal of stick-to-itiveness, especially if you have a lot of debt and not much income to throw at it. When you do finally make the decision to pay off your debt once and for all you might wonder what the best plan of attack is. Do you aggressively pay down one debt while only paying the minimum payments on other debt, or do you spread the extra payments out toward all your debt?
First and foremost, you should use whatever method you are most comfortable with. The utmost mathematically sound method may not be the method you decide to use, but as long as you are comfortable with the method you choose and you are actually making some progress in paying down the debt, then you’re doing it right.
Here are some of the more popular methods for paying down debt:
1. Pay your accounts down one at a time, concentrating on one account while paying the minimum payment on all the others. Which account do you concentrate on first? Choose either the account with the highest interest rate or instead choose the account with the smallest balance so you experience small victories quicker, potentially motivating you further.
2. Consolidate all your debt into one account, such as an equity line of credit, a personal loan, or a credit card with a very low introductory interest rate that will not expire until after your debt is paid off. Once the debt is combined into one account, make large payments until it is paid off.
3. Aggressively attack all your debt at once, spreading the extra payments out to your various bills. As accounts are paid off, put the extra money toward the other accounts.
You want to choose a method for paying down your debt that keeps you motivated while also allowing you to eliminate debt more quickly than if you didn’t have a plan in place.
For many people, the hardest decision about paying down debt is actually deciding that it’s time to get serious. It is all too easy to simply send in minimum payments and not dwell on the interest charges and fees you’re paying each month, so actually acknowledging that something needs to change is a huge step. Pat yourself on the back for making a smart decision, and then get to work paying off your debt using whatever method works best for you.
