Make a list of your debt starting with the lowest balances first.
Whether your loan is a mortgage, student loan, car loan or personal loan, freeing yourself from debt can be liberating. It's especially important to pay off high interest loans quickly, the only caveat is if there are steep penalties for early repayment, as is the case with some mortgages. If you put your mind to it and make some lifestyle changes, you can pay off loans quickly, leaving you with more money to spend on the things that really matter.
Instructions
1. Stop spending. Obviously, you need to pay your bills and buy food, but in order to have extra money to pay off your loans, you will need to tighten the purse strings. Give yourself a weekly or monthly budget for non-essentials like a latte at the coffee shop or a lunch out and stick to your budget. Once that money is gone, stop buying anything that isn't necessary for that month or week.
2. Pay the smallest balances first. This is called the "debt snowball" technique. Start by paying the minimums on all of your debt and loans, then pay as much as you can extra on the loan with the lowest balance. This loan will be paid off first, giving you a sense of accomplishment and freeing up more money that you can pay toward the next loan with the lowest balance.
3. Pay more than the minimums. In order to pay off loans and debt faster, you will need to pay off more than just the minimum. If you are scraping by as it is, you will need to find a way to make more money to put toward your debt.
4. Increase your income. Take a second job, work overtime or hold a garage sale; do anything that you can to increase your monthly income. Use this extra income solely to pay on your loans. If you only make $100 more a week, that's $100 a week off the principal of your loan balance. It adds up over time and saves you interest charges.
5. Borrow money. Perhaps you can borrow money from a friend or family member, allowing you to pay off your loan and then make payments without (or with less) interest. You may also be able to borrow against your 401k at work, your life insurance policy or your home equity. Make sure the benefits of paying off your loan early outweigh the detriment of taking on more debt.
Tags: your loan, more money, will need, with lowest, your debt, anything that