Pay Off Debt Quickly, if not the biggest, obstacles to financial freedom. Between student loans, credit cards, and other debt we acquire through our endless adulting, debt is bound to come down on us sooner or later.
But instead of letting it crush you, there are ways to manage it and even pay it off without too much fuss. Here are 3 strategies to help you pay off debt quickly and easily.
Pay Off Debt Quickly: Avalanche Method
With this strategy, your aim is to pay off your accounts in order from highest interest rate to lowest. The goal is to pay off accounts quickly in order to free up money and apply it to the next debt. This is a “slow and steady wins the race” method because although it’ll alleviate your debt, it’ll take at least a year to gain momentum and see a real difference.
Here’s how it works:
- Make the minimum payment on all your accounts.
- Put any extra money you come into toward the account with the highest interest rate.
- Once the debt with the highest interest rate is paid off, move onto the next highest interest rate.
Best for: Those of you who just want to pay off debt, no matter how long it takes. If you’re looking for quick debt pay off where you can see the results immediately, try a different strategy.
Pay Off Debt Quickly: Snowball Method
With this strategy, your aim is to pay the lowest debt to the highest. The goal is ultimately to pay off all small debts until you’re just consistently paying on the largest balance. This strategy encourages you to keep going via small successes and may even improve your credit score in the meantime.
Here’s how it works:
- Make the minimum payments on all your accounts.
- Put any extra money toward the smallest debt.
- Once the smallest balance is paid off, move onto paying the next smallest debt.
Best for: Those of you who are interested in improving your credit score while paying off debt. It’s also a great way to stay motivated to pay debt as you see the benefits quickly.
Utilize Personal Loans For Credit Cards
When you have account balances that seem too overwhelming to pay off over time such as high credit card bills, you may want to take out a personal loan to pay it all off. Here are the benefits of using a personal loan to improve debt:
- Because a personal loans is an installment loan and not a revolving account, they won’t impact your credit score like a credit card. So using one to pay off a credit card will have an immediate positive impact on your credit score.
- Personal loan interest rates tend to be lower than credit card interest rates, so your monthly payments would be noticeably lower.
If you choose this strategy, make sure the loan terms are better than the credit card terms or else you’ll make your financial situation worse.
Best for: Those of you who are struggling with credit card debt and need to settle it before moving onto paying off other balances.
See Our latest Blog- 16 Year Old Entrepreneur Receives Investment In Her Hot Sauce Company