Category: Debt

Debt

Evaluating Your Debt

Many people have debt of some sort in their lives and feel that they will never get rid of it. This is not true, but you need to take steps to work on getting rid of your debt. If you just continue on in the same way you are now, you likely will not make much progress.

What type of debt do you have?

If your debt tends to be attributed to consumer goods and credit cards, it is likely that the majority of your payment is going to accrue interest, especially if you are only making the minimum payment required. In order to get rid of this faster, you need to pay more each month. Even if all you can manage is an extra ten or twenty dollars, it is worth putting it towards the debt, as it will go directly towards the principal. In turn, the interest will be less the next month. Continue putting in extra each month and you will be rid of it sooner.

Extra payments are helpful

Car and house debt work differently as they are on a finite schedule. The balance you owe and your interest rate will determine how much interest you are paying, but you will see progress. Again, any extra money you can put towards this debt is beneficial as it goes to the principal, and you will see it go down faster. If you can make a couple extra payments a year, it can decrease a mortgage by years and a car loan by many months.

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Check your Lifestyle

If you do not think you can find an extra twenty dollars a month, think about which is more important – paying off the debt or your current lifestyle? Look at what you are spending your money on – do you buy lunch every day at work, do you stop at a coffee shop for your morning coffee? Maybe you have the super deluxe cable package. Can you find something that you can cut back on? You will be amazed at the money you can find when you look for it and make a few changes. Before long you will be amazed as how much money you are saving.

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