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Best Way To Pay Off Debts And Be Smart With Money

Best Way to Pay Off Debts and Be Smart with Money

Making plans to pay off your debt should be part of your money management efforts. Debts do not only hurt your credit report but will also take your peace away since your creditors can come knocking on your door at any time. This is why you should make conscious efforts to pay off your debts.

Here are helpful tips to help you pay off your debts and be smart with money;

Tip #1: Compute Your Debt Total

Knowing how much you owe is the first step towards determining how to pay off your debt. So, sit back and compute your costs and do not leave out any. Some of such costs may include short term loans, credit cards, students’ loans, auto-financing or even mortgages. This computation will also help you figure out what it will take to make full repayment of your debts.

Tip #2: Focus on High-interest Debts

When making efforts to repay your debts, you should prioritize credit cards and other debts with high interest rate. Ultimately, you will pay more when you allow high-interests debts to linger. Add more money in repaying the most important debts than the less prioritized debts.

Also, you should prioritize a short-term loan such as a car loan. It is important you pay down debts on short loans too. The reason is that you can be more indebted if you do not pay off the debts in full and when due.

It’s not time to relax after paying off your most prioritized debts. Instead, allocate the funds to the next debts in your list. For instance, you can allocate the same amount you were paying on a credit card debt to your student loan or the next prioritized debts in your list.

The whole idea is to enable you pay off all long term, recurring, and short-term debts sooner. This way, you won’t incur more debts as a result of being late in your debt repayments.

Tip #3: Always Stick to Your Repayment Schedule

Do your best to stick to your repayment schedule – both in terms of time and more importantly the amount and set date. Avoid falling for the temptation to use the funds earmarked for debts repayment to meet other needs.  Ensure you always have some funds reserved for emergency expenses, so that you won’t have to default on your debt repayment schedule. In essence, do not let anything distract you from the commitment you have made to repay your debts as soon as possible.

Finally, you should endeavor not to incur more debts as you repay the outstanding debts. For instance, to avoid further credit card debts, you should opt to pay in cash.

Daven Michaels is a New York Times Best Selling Author and CEO of premiere global outsourcing company, 123Employee. The company employs hundreds of young bright individuals on three continents. His International event, Beyond Marketing Live! Inspires entrepreneurs to build & grow their business with revolutionary new theories and systems allowing them to design the business and personal lifestyle of their dreams.

One Response to “Best Way To Pay Off Debts And Be Smart With Money”

  1. Tony Joe says:

    Everything is very open with a precise clarification of the challenges. It was really informative. Your site is very useful. Thanks for sharing!

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