debtEliminating debt and becoming debt free isn’t has hard as you might think.  Debt is common, and people get into it for all kinds of reasons.  Just paying everyday expenses like food, water, and electricity can lead to debt, as the prices of these things are going up!  In fact, the price of EVERYTHING is going up, while paychecks are going down.  It can take all the money you have just to pay for your basic needs, never mind savings or doing anything fun. 

If an emergency comes up, or if your kids need braces (or yearbooks or prom dresses, etc.), it could be a major financial disaster for you!  You might turn to your credit cards and get yourself even further into debt.  But how do you get out of it?

One of the best and easiest ways to go about eliminating debt abd becoming debt free is to use the following method:

1.  Start paying the minimum payment each month on all but ONE of your debts.

2.  Choose the debt that has the smallest balance and start paying as much extra on that each month as you can, whether it’s $5, $10, $20 or more dollars.3.  You’ll pay off this debt quickly by paying extra.  Once it’s paid off, take the next smallest debt and pay the minimum amount of the payment on the previous debt, plus the extra you were adding to it.  So, for example, if you started with a Visa that had a $300 balance and a $15 minimum monthly payment and added an extra $20 a month to that, you’d be paying $35 a month on that Visa.  Once it was paid off, let’s say you begin paying on a MasterCard with a $450 balance.  The minimum payment on that is $25 a month.  Continue to pay the $25 a month, but add the $35 a month to it that you were paying on the Visa, so that you’re paying a total of $60 a month on the MasterCard.

4.  As you pay off each debt in turn, working your way up from the smallest to the largest, always add the extra payments you’re making on the previous bills to the minimum payments on the new ones.  For example, that $60 a month you ended up paying on the MasterCard will be added to the $35 a month minimum payment on your Discover card when you start paying that off, for a total of $95 a month going toward Discover.  That’s $95 a month you’ll add to the minimum monthly payment of the next bill in line, and so on. 

Using this method, you can even potentially pay off your house in about five years! This is one of the quickest and easiest ways of eliminating debt and becoming debt free out there, and it doesn’t even require a loan or credit counseling, or even a change in your lifestyle!  All it takes is organization, and you’ll be debt free for good!

This is the fifth installment in our credit & debt series. Be sure to check back for updates…

Filed under: Debt & Credit

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