Paying off debt faster is a big goal for many couple, not just in terms of the financial amount it can costs, but also the emotional baggage of having debt hanging over you. The good news is that having a plan of an attack significantly increases your chances of success and increases how quickly you can get rid of it.
- Break up your debts into smaller goals. Instead of looking at the total sum of your debts, it can be empowering to break it up into more manageable chunks and celebrating appropriate milestones.
- Track your progress. staying focused can be hard of you have large amounts of debts, so tracking your progress is vital. It can as simple as a chart on your fridge or you can use an app on your smartphone to keep you in the loop.
- Set up a doable payment plan. Eliminating and cutting back on unnecessary expenses that don’t really matter to you can be be redirected instead reducing debt.
For us, getting out of debt meant getting adjusting our budget and automating a plan to keep us on track as we used a debt snowball. It helped me as I paid off my credit card debt and when we got rid of the car loan.
In case you’re not familiar with the debt snowball method, I’ll share a quick example. Let’s say you two have 5 debts, totaling $26,000 and with a combined minimum payment of $450, dividing like so.
- Visa: $100 / $15 minimum payment
- Mastercard:$500/ $50 minimum payment
- Car Loan: $10,400/ $200 minimum payment
- Student Loan: $15,000/$185 minimum payment
After trimming your budget, you two have an extra $100/month to use for the plan. With the snowball, you take that $100 add apply all of it towards your Visa. Once that is paid off, you take that $115 ($15 minimum + your $100 snowball) and use it towards the Mastercard for a total of $165. After that is completed, you pay $365/month. You continue until you’re completely debt free.
You may have noticed that I did not include interest rates with calculating the snowball plan. That’s because the debt snowball is about getting small wins fast. It’s less about the math and more about staying on target.
If you prefer a high tech and handy solution to getting out of debt, you may want to check out the appropriately named Pay Off Debt App. Using the debt snowball method, you can set up a manageable plan quickly and easily that will get your paying off debt faster.
To celebrate the latest update of the app, The Debt Myth is hosting a huge iPad mini giveaway! If you’re look for more information about the Pay Off Debt app or the contest, please check out the Debt Myth’s Rafflecopter giveaway.