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How to Pay Off Debt Faster

Average Credit Card Debt

In America, although studies vary, many claim the average household credit card debt is somewhere around $15,000 for a typical family. Some studies also indicate that a large percentage of this is due to purchases of items which are not necessarily needed. How can you pay this off and put extra income in your pocket right now? Follow the below method and change your life for the better. Live like many financially free individuals do: debt free, and stop paying interest where its not needed. Use interest to your advantage, don’t let it use you. The below method is a very effective way to tackle debt and change your life. Personally, I have used these methods and gone from a period several years back where I was almost half a million dollars in debt to around $80,000 in debt (comprised of student loans and a car loan). In addition, our retirement assets have grown in value to around a couple hundred thousand.

At this point, I do not have credit card debt, although I put most of our monthly expenses (variable expenses/some fixed) on a rewards credit card to accumulate points which I then cash in as a credit on our monthly statement. Using this method, I am now and will attempt to forever be, free of credit card debt, and using the rewards card to make money each year. Last year I made over a thousand dollars using my Bank of America Travel Rewards card for my monthly expenses including private school tuition, and paying it off monthly. I learned my lesson and will never again let debt use me, but instead will use it to my advantage. Below is the outline of the plan to help get debt free and stay debt free.

Get Rid of Debt Faster Plan

  • Write Down All Debts you Owe (so you have a clear picture/starting ground).
  • Determine the Interest Rate you are Paying on Each Debt (you always want to target the highest interest rate cards/debts first).
  • Find Somewhere to Cut Down your Bills by $100 (for example) or use savings and begin to pay down the highest rate card first.
  • Put the extra $100 each month toward the highest rate card and you will pay it off sooner (if you can do more, do so).
  • Once the first card is paid off, do not incur additional debt. Instead, think like a millionaire, take the now $400 you would have been paying toward the card that you paid off, and put that each month toward the card with the next highest interest rate.
  • Continue to do this until all cards are paid off. Then when you want to buy something in the future, put off those purchases until you save the money or a majority of the money to do it. You do this the same way, set it aside monthly.

If you do the above you will take control of your financial life forever. Don’t let debt use you, use it to your advantage when necessary and make smart financial choices. Realize you do have control and take responsibility.

Paying off student loans, and credit card debt could save you thousands of dollars each year! Additionally, as part of an overall plan, start learning about investing for your future. Think about it. The amount of interest most people end up paying on credit cards and loans throughout their lives is astounding. If you were to live for a few short years, or sacrifice and do things the way others won’t (use your bonus to pay down your student loans, allocate extra monthly payments to your high interest debt, vow to never carry a monthly balance on a credit card again) then you can later live the way others won’t. Having once carried a massive debt load, and now being on the way to becoming debt free, i can attest to the fact that living debt free is the better option. Additionally, do the math and see how much you will save each year by paying of a high interest rate loan early, then allocating the $300/month (or whatever your payment was) to paying off other debt, until your debts are paid, then allocating all of the fee amount per month toward investing to increase long term wealth and passive income. You will end up paying far less in interest and building much more wealth over time. Congratulations on taking the time to read through this section and learn a new method to work toward living debt free. If you put this plan in action and start tackling your debts, you will be on the path to a better financial future and success.