Debt Stacking - Fast Track Out of Debt
You go to the mail box and scan - a couple fliers (nah), your magazine
subscription (yes!) and bills (groan). Every month the bills show up
and as you sigh and take out your check book you wonder if you will
ever be free.
Each month you pay the minimums and although you KNOW you've got a
handle on it - you are not charging your credit card or accumulating
new debts anymore - it seems that you will be paying the minimum fees
forever.
Did you know that HOW you pay your debts can affect how soon you will
finishing paying them off - even if you keep paying the same amount for
debt every month? Of course you might be able to get a consolidation
loan, but if you're not eligible or are not interested then there are
several other things you can do.
It's not always the easiest to figure out the mathematics, but there are three steps to quicker debt relief - guaranteed.
STEP ONE - Create a list.
List your smallest debts first followed by your largest high-interest
debts (credit card) and then your largest low-interest debts (Lines of
credit and taxes).
Plan to pay the minimums on all debts with these goals in mind:
STEP TWO - Small bills first.
They may not be the highest interest, but every bill that you are
paying some interest on means you are usually only paying minimal
amounts on the principal. Multiple debts are also a sure way to bring
your spirits down. Paying off small debts first is a quick way to start
checking them off - and freeing your mind.
STEP THREE - Move the payments along.
When one debt is paid add the funds to the next debt. For example, say
you're making $75 payments to a small debt. When the debt is cleared
add the $75 to the next debt on your list. If the next debt had a
minimum payment of $100, you will now pay $175 until it is paid off.
When that one is finished, take the $175 and add it to the next payment
and so on.
STEP FOUR - Save the cash!
Don't forget that when your debts are cleared you have set yourself up
for a better financial future. The best way to take advantage of your
new situation is to use all the money you were spending on debts and
start investing or saving it every month.
With this strategy your debts will clear faster meaning you will pay
less interest, you will see progress as you clear small debts first,
and you will not be tempted to use the funds for personal use instead
of debt repayment.
It is a worthwhile goal to get out of debt. Seeing that goal come
sooner and teaching yourself discipline sets you up for a brighter
financial future. You OWE yourself that!