Learn strategies that can help you pay off your debt faster. How to organize yourself better, prioritize payments and consolidate debts.
Establish a monthly program through which you can settle your debts early. It's not easy to do, but the point is to take a cold look at your current expenses, discover what you can avoid or postpone, and allocate those resources to this plan. It is ideal that you reach 10% of your income.
To understand what is affecting your budget the most, collect recent account statements from all your creditors. Write down the name of the creditor, the amount owed, the monthly payment, and the interest rate applicable to your accounts. The key is knowing which debts have the highest interest rates and minimum monthly payments to help you determine which debt is costing you the most.
It is essential to establish a budget to know what we are spending on, and to control our expenses. We can use tools such as specialized apps or an Excel spreadsheet.
If you have a hard time paying off your debt at the end of the month, try paying more than the minimum monthly payment or making several payments throughout the month. This will reduce your debt faster and save you money on interest payments by lowering your average daily balance.
If you have a lot of debt to pay off each month, you might consider getting a consolidated loan, or combining all your debts into one loan. This simplifies your payments to just one per month, which is usually less. However, it is important to consider that the interest rates on consolidated loans are higher and the time to pay off the debt is longer.
One strategy that could help you reduce your debt faster is to pay the minimum on all your debts each month, except for the one with the highest interest rate. Of that debt, pay off as much as you can. This could save you money on interest payments, and those savings could help you reduce that debt more quickly.
If you are dealing with multiple debts, you may want to consider debt consolidation, or combining all of your debts into a single loan. This could allow you to pay off your debt with one monthly payment, which is typically much lower than all of your previous monthly payments combined.