10 tips to get your debt paid off ASAP (Pt 1)
1. List debts by interest rate
List your debts from smallest to largest. Then, list them in order from highest interest rate to smallest interest rate. Since the one with the highest interest rate is costing you the most money, that’s the one you want to pay off first.
2. Have an emergency savings fund
Before starting to really pay off your debts, build up a small emergency savings fund of at least $1,000 for any unexpected expenses or bills that could pop up (think car repair, medical bills, etc.). This is your “rainy day” fund, or money you tap into when something unexpected happens. If you do have an emergency and need to use some money from your fund, build it up again before paying off more debt.
3. Always make minimum monthly payments
You’ll want to be sure to always pay your minimum payments on time for every debt you have — in order to avoid paying higher interest and late fees. So if you’re trying to pay off the highest interest rate card first, put more money toward that card each month, while continuing to make the minimum payments on all other debts. Then move to the next highest interest rate card and so on.
4. Downsize – temporarily
Take a look at your expenses from last month. Is there anything you really don’t need? Did you go out to eat too much? Do you need to rein in entertainment spending? Pay special attention to monthly regular monthly subscription services that can add up big over time. Then, apply these savings to your debt.
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