Debt is what robs most Americans of their freedom.
However, trying to pay off debt or finding a fast way to do it can be a a difficult task for most people. Most Americans' financial plan consists of finding a hidden briefcase full of money someday (that's a joke).
This simple trick can accelerate you through your debt much faster than simply paying and praying (what I'm about to show you, not the briefcase thingy, although that CAN speed things up).
I'm going to try to keep this simple and use some fictitious easy round numbers just for illustration purposes.
One of the biggest problems people have with debt is that when something finally gets paid off, they figure they have breathing room and spend the money that they aren't paying on the debt that got paid off while continuing to pay on the other debts. This is a mistake.
Lets say you have ten outstanding debts that costs $1,000 per month to meet the monthly minimum.
To pay off your debts faster, plan on spending $1,000 per month until you have zero debt left.
For example:
First, figure out which debts you owe the least and which you owe the most on.
Continue to make your monthly payments on your ten debts.
If you have ANY extra that you can use to apply to your smallest debt, do it.
Once you pay off your smallest debt:
Take the money you WERE paying on the smallest debt and apply that to your next smallest debt in addition to the payment on it you were paying before.
For example:
Debt 1: $100/month - now paid off
Debt 2: $100/month
Now that Debt 1 is paid off and you're not spending $100 on it per month, apply it's money to debt 2 so you're paying $200/month on Debt 2.
Debt 2:$100/month + monthly payments on Debt 1 ($100/month) = $200/month to pay off debt 2 and it doesn't cost you anything extra!
This will speed you through your second debt while continuing to pay on your other 8 debts.
When Debt 2 is paid off, apply the monthly payment from it to Debt 3 while continuing to pay your remaining 7 debts.
For example:
Debt 2:$200/month - now paid off
Debt 3:$100/month + monthly payments on Debt 2 ($200/month) = $300/month to pay off debt 3.
When debt 3 is paid off, take the money you were paying on it and apply it to the monthly payment you were paying on Debt 4 and so on until you're completely out of debt.
It requires a bit of sacrifice because despite having "more money" each month, you're going to continue to cinch your belt and live a bit tight until you're completely debt free.
The upside? You're payments on your debt accelerate exponentially as you continue paying your debts and will be out of debt WAY faster than doing it the other way (but not as fast as if you found a briefcase full of money....unless you took the briefcase full of money and said "forget the debt, CAYMAN ISLANDS here I come!") The other upside? The Caymand Islands come a lot faster this way.
Hope this helps!
