Paying off debt can save you plenty of money in interest charges and fees, but more importantly it can give you access to more money to save, invest or enjoy. Pay off your debt and stop watching your money go straight to your creditors every month.
Know Your Debt
It will be much easier to pay off your debt if you first take the time to fully examine how much debt you have. How much money do you owe, and whom do you owe it to?
Even if your debt seems daunting and you would like nothing more than to ignore the actual amount, you will have a harder time paying off the debt without a clear understanding of the task ahead of you. Open all your credit card and loan statements and tally up the numbers.
Stop Using Debt
Once you have a firm grasp on the amount of money you actually owe to your creditors, the next important step is to stop using credit. You don't have to close your accounts, but you should not use a credit card you are actively trying to pay off because it defeats the purpose and slows your progress. Even if you can't pay a great deal of money toward your debt, by not adding to your debt you will pay it off faster.
Pay Debt Off
It is a good idea to pick one debt and aggressively pay it off. Make minimum payments to all your other debts until you can eliminate the first account, then choose another debt to aggressively pay off.
You can choose the account with the highest interest rate if you would like to use the most mathematically sound method, or if you think you need more motivational tactics you can choose to first pay off the account with the smallest balance so you can experience your first victory faster.
Whatever method you choose, as long as you stay the course and aggressively pursue the task of paying off your accounts, you will certainly pay off your debt faster than if you had no plan in place at all.
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