4 Steps To Pay Off Debt FAST

Debt is a scary situation that you can easily find yourself in. Watch this video or read below on how to get rid of it FAST.

Firstly, what is debt?

Debt is when you owe money to someone else. Point blank simple. It can come in the form of a loan, credit card debt, car loan, a mortgage or house bond, etc.

If you have a debt of any kind, I recommend using the debt snowball strategy to pay it off.

1) List all your debts smallest to largest (this means listing them by the total amount owed, NOT monthly payments)
2) Make minimum payments each month on all debts
3) Then attack the smallest balance first. Throw all your extra money into that one debt and watch it begin to disappear!
4) After you’ve completely paid off that first amount, keep the momentum going by attacking the second smallest debt on your list.

Let that snowball roll!

Usually, most people want to pay off the debt with the highest interest rate first but studies have shown that starting to pay off the loan with the lowest outstanding balance first has a snowball effect on the rest of your debt repayments.

Come again?

It’ll take you a shorter period of time to pay off all debt starting with the a smaller amount first.

Once you pay off one loan, you’ll be so addicted to the feeling of paying something off and you’ll get on a roll to pay off the next lowest amount.

This method inspires and excites you to pay off debt instead of making it an excruciating tedious process. Let’s look at this in real life.

Let’s say you have three streams of debt (otherwise known as a liability).

  1. Credit card with a $5,000 balance and earning interest of 22%
  2. Store credit with a balance of $2,000 and 15%
  3. Car loan with a balance of $10,000 and 9%

Usually, you would want to pay off the credit card first because it’s earning the most interest, right??

This debt snowball strategy would say to pay off the store credit first because it has the lowest outstanding balance!

**Make sure you’re still paying the minimum payments on all debt and but focus on paying off the store credit first, then tackle the credit card, then the car loan.

TIP: If you’re fighting some HUGE balances, it helps a lot of people to set small goals inside of each debt so that they can see and feel the progress each month. You can even make a chart to help you visually!

If you’d like help coming up with a specific debt repayment plan and strategy for you, email me at hello@masteryourfinancestoday.com or click here to schedule a free consultation today. I’d love to help you free your mind and Master Your Finances!

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