My AccountBest game plan to pay off debt faster
You work out, you take vitamins, you eat right, and you go to the doctor. Okay, maybe there’s an occasional donut or two in there, but overall, you care about your health. Can you say the same about your financial health? If you are in debt over your head, then you might need a good strategy to pay it off quickly so that you can get back in financial shape. Just as exercise makes us feel good, being debt free will help you feel less stressed, happier, and healthier. 1
Every good debt payment plan needs a winning strategy, and that starts with evaluating your current financial situation and your debt balances. Compile all your credit card and loan statements and take a good hard look at where you are. Then, make a plan including daily or monthly monitoring, and use discipline to stick with it. Find ways to reduce your spending so that you can use those dollars in your winning strategy. Plus, see if there are ways to increase your income so that you can also use that money in your strategy. Remember that every dollar counts toward the end goal.
Below are three winning game plans that you can use to help you pay off debt faster. Find one that fits your motivational style and then make a commitment to stick with it.
Game Strategy #1: Smallest First
Some call this first strategy the Snowball Method. This is the plan where you focus on paying off your smallest debt balance first while still making the minimum payments on your other balances. Make a concentrated effort to put extra money each month towards this debt. Once that is paid off, you roll that payment over to your next smallest balance until you have them all paid off. The best part of this plan is that you feel motivated when you see your small victories along the way.
Game Strategy #2: Highest First
This is the strategy to choose if you’re more motivated by saving money in the long run. In this plan, you put your focus and extra money toward paying off the debt with the highest interest rate first. Once this balance is paid off, roll that payment to the one with the next highest interest rate until they are all paid down. By doing this, you can save money overall by paying less interest over time. It also could help you become debt-free faster.2
Game Strategy #3: Consolidate Them All
The third strategy is for those who want an easy-to-manage game plan. In this method, you consolidate multiple credit card balances into one loan or credit card with a single payment. Ideally, you would want to choose a loan or credit card with the lowest interest rate and one with a low or zero-dollar balance transfer fee. This takes the stress out of multiple payments while keeping you on track to pay off your debt quickly.
Just as staying in good physical health takes discipline, periodic monitoring, and hard work, so does paying off debt. Your financial health and well-being depend on it. Choose the game strategy that motivates you the most, track your progress along the way, stay focused on the end goal and you’ll be winning.
