Methods for Paying Off Debt

There are many methodologies for paying off debt. Whichever one you decide to use, jump in with both feet and don't quit until the final debt payment has been made. Most households are able to become debt-free, excluding their mortgage, in 18-24 months. Can you picture your life with zero debt payments? How much extra money would you have freed up to put towards other goals?

Debt Repayment Strategies

1. Snowball Method: Pay off debts with the smallest balances first, while making minimum payments on the larger debts. This method allows you to see progress the fastest.

2. Avalanche Method: Focus on paying off the debts with the highest interest rates first, while making minimum payments on the other debts. The total interest paid will be slightly less with this method compared to the previous method, progress may not be as noticeable as quickly.

3. Debt Consolidation: Combine multiple debts into one loan with a lower interest rate and a single monthly payment. This method could give you a false sense of accomplishment making it difficult to stay on course.

Debt is like snow, you have to get rid of it and carry on with life.

Payment Optimization Techniques

1. Pay More Than the Minimum: Increase the monthly payments to pay off principal balances faster.

2. Bi-Weekly Payments: Make half payments every 2 weeks to reduce principle balances and interest charges. Setting up your mortgage on this schedule will cut 7 years off a 30 year loan and save you thousands in interest!

3. Lump Sum Payments: Apply large sums, such as tax refunds or bonuses, to your debt.

4. Interest Rate Negotiation: Contact creditors to negotiate lower interest rates.

Behavior Changes

1. Create a Budget: Track income and expenses to identify areas for reduction.

2. Reduce Expenses: Cut back on non-essential spending to allocate more funds towards debt repayment.

3. Increase Income: Pursue additional income sources, such as a side job or freelance work.

4. Avoid New Debt: Refrain from taking on new debt while paying off existing balances.

Additional Resources

1. Financial Coaching: If you have attempted to follow any of these steps on your own and lack the discipline to follow through, you are not alone. A financial coach will help you with building confidence and will hold you accountable to your stated goals. Schedule your FREE consultation with me at www.smithfinancialcoaching.com

2. Money Management Apps: Everydollar.com will help you get organized and allows you to take your budget with you on your phone.

Remember, paying off debt take time, discipline and patience. Choose a method that works for you and stay committed to achieving financial freedom!