Paying off debt quickly requires minimizing new spending and ranking debts according to interest rates, when possible. In addition, to the extent possible, high-interest debt should be transferred to lower-rate accounts to minimize interest expenses and in turn ease the repayment process.
Devote as Much Money to Repaying Debts as Possible
Paying off debt begins with maximizing the amount of money available to pay them off. Although it is cliche, living within one's means is essential to closing debts. Similarly, the speed of repayment is a direct function of increasing payments and avoiding additional consumption that might cause new debts.
For example, simply paying the minimum on a credit card bill is insufficient. Paying as much as fast as possible toward the debt will reduce the amount of interest paid and will expedite the end of the debt.
Transfer Debts Away from High-Interest Credit Cards
Especially in the case of credit cards, it is sometimes possible transfer debts away from high-interest rates to those with lower rates. This reduces the interest obligation on the debt, which makes it easier to reduce the principal of the debt.
Rank Debts by Interest Rates
Debts with the highest interest rates should be paid first to minimize interest expenses. In much the same way as transferring debts to lower-rate accounts, prioritizing high-interest-rate debts will speed the process of paying against the principal of the debt instead of just paying interest.
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