How to pay off debt strategically

by , 09 December 2014

Do you feel stuck in debt? With every purchase you make, do you get sink deeper and deeper into debt? Then it's time to take action and work on paying off your debt as quickly as possible.

While it may take years to completely pay off your debt, it's highly advisable that you take action starting now, instead of postponing it to an unknown future date.

Here is how to pay off your debt strategically starting today.
 
1. Cancel your non-essential expenses and redirect that money towards paying off debt
 
If you make paying off debts your main priority, focus on reducing or even cancelling non-essential expenses, such as gym memberships, subscriptions, fancy dinners, the morning (expensive) latte, and redirect that money towards debt payment.
 
2. Pay off debts with the highest interest rates
 
A good strategy to use is to get rid of debts in the order of their interest rates. Rank your debts by interest rate and prioritize paying off high interest debt.
 
3. Take control of your spending
 
If you know yourself to be a big spender, a bit of self-discipline is in order. Take back control over your financial situation and create a workable budget that allows you to live within your means, but also increase debt payments.
 
To get started, write down your monthly income and subtract the fixed expenses (rent or mortgage, bills, utilities). Then, allocate separate amounts for food/groceries/eating out, entertainment, clothing, extras. Subtract those amounts from the monthly income and see what you are left with. Readjust the non-essential expenses in such a way as to be able to allocate more money towards debt payment.
 
4. Retrain your financial habits
 
If you’re a big spender and you often rely on credit cards for casual, non-essential purchases, it’s time to retrain your spending habits. Everything you’ve learned can be untaught, and so can useless spending.
 
5. Don’t acquire any more debt
 
All your efforts are useless if you continue with your bad spending habits. In order to stop acquiring more debt, stay away from shopping centres and online shopping, and don’t go shopping without a plan.

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