How to pay the debt quickly using the method of the pile
Whether consumer debt on credit cards, student loans or a mortgage, most people are driven by the debt at some point in their lives. What we can keep working jobs we hate just to pay the bills and keep their heads above water. By learning to pay the debt that you can quickly release the load and remove some of the stress in your life.
Today I’ll show you how to pay your debt as quickly as possible using the method of the pile.
Step 1: Stop creating new debt
Most people do not receive training in management of money and how to live within their means. If you’re in debt, then you are probably one of these people and it’s time to bite the bullet of reality. It will be impossible to get out of debt within recycle their financial habits at that time.
You must take a stand against all the vendors trying to take your hard earned money or providing easy financing. You do more things to make you happy. What you need is the financial peace of mind.
So cut up your credit cards or freeze them. I mean literally. Put them in a bowl with water and store in the freezer. So when there is a possibility to spend you defrost time (you and credit cards) and decide whether you really need that purchase.
Step 2: Sort your debt by interest rate
Make a list of all your debts with amounts and interest rates. The higher interest rate has to be at the top, as is what you pay first. Pay off your high-interest debt is the key to the method of the stack and to pay the debt as soon as possible.
Interest is a powerful weapon, and now the bank or other financial institutions use against you. The interest increases significantly the amount you have to repay, and we are often completely unaware of how much it is.
For example, if you have a credit card debt of $ 10,000 at an interest rate of 20% which pays a minimum payment of $ 200 a month, will end up taking 9 years and 8 months to pay the actual amount $ 21.680 to $ 11.680, including interest!
Step 3: Lower your interest rate
You can often reduce their interest rates by the balance transfer credit card. This means moving your credit card to another bank and will lower the interest rate to get your business. Shop around and try to get the interest rate for a shorter time more (preferably until payment).
Make sure you read the terms and conditions carefully to not bitten by the new bank in other respects. Once you’ve done that, you can sort your debt list again if things have changed.
Step 4: Create a strategic plan fees
That’s where we improve their financial control Step 1. Take a piece of paper and write your after-tax income and expenses you have. This will include the minimum payments on all your debts.
Look at your expenses and then rank them in order of importance to you. Items to look down your list and decide if you prefer or be financially stable. The goal is to create a strategic spending plan where your expenses are lower than their income.
It also decides how much you are willing to spend for every area of ??your life. You can allocate amounts of rent, groceries, restaurant, buying clothes and other activities, however, realize that once you have spent the money allocated no immersion in other areas. It also helps to have an account of pleasure that you can spend on what you like and an emergency account in case your car breaks down, etc.
Also you want to include in your expenses of the Strategic Plan as an additional amount will be used to repay debt. Can you pay $ 20 a week? $ 50? $ 100? $ 200 or more? It is important to get a realistic number that can commit to every week without fail, what is the battery of your refund.
Step 5: Create a payment program
The first part of the method of the cell is to cover the minimum payment on each debt you have. Every time you miss a payment, you will incur these costs add up quickly. This also includes the minimum payment of the debt with a higher interest rate.
Then, to the debt with the highest interest rate (your target debt) you add the repayment of the strategic spending plan battery. You apply this pile of money and the minimum payment until the debt is paid in full.
As the decline in official minimum payment, add the extra battery the amount of your payment. Just as your minimum payment refund decreases battery also increases. This will increase the speed with which to pay the debt target by adding other payments.
Step 6: Reward your progress
Want to track your target debt so you can see your progress along the way. You can also decide the steps that will celebrate and reward. A reward does not have to cost money, but if it comes then its strategic expenses previously allocated to the Plan.
This is an important step because it will keep your motivation when you feel that your will fades. As you trained for brushing teeth and showering, you can train yourself to manage your money. Feel good that you now enter the 10, 20% of people who are really responsible with money.
Step 7: Make your results
Once you pay your debt target was a big celebration and congratulations. Then move the payment stack (which includes the previous minimum payment to date) to the following rate debt with higher interest. This becomes the new target using debt and the amount of payment and the minimum payment pile for new debt.
This is why the method is so powerful battery. As the debt decreases effectively increase your stack payment amount. This means that the debt will be paid second faster, the third even faster than that, and so on until it is completely debt free.
Step 8: Be nice to you
In this resolution process to test several times. Maybe you have an emergency like your car breaking or the need to move from a sick relative. The important thing is not to throw their hands in despair, while returning to their old habits.
Life will test your commitment to your new attitude and responsible money depends on how you respond. When things go wrong (and I guarantee they will) you have to shrug and on track. Show compassion when he accidentally examine its spending Strategic Plan and decide to do better next week.