Determining The Order To Pay Off Your Debts In
When you have multiple lines of debt, it’s often difficult to decide how to arrange them or pay them off. Most people choose between two options. Either to pay off the debts with the highest interest first going down to the lowest. Another option is paying off the smallest debt first and going in that order. The latter is often considered the fastest and most effective debt repayment strategy you choose to implement. It is imperative to consider all your options before making a decision.
Paying off High-Interest Debts First
The thing with high-interest debts is, they are very expensive. The amount of money you pay off in interests is a lot, which is why it’s preferable to pay off their high-interest debts regardless of the amount. This method helps you save money and is relatively cheaper. The only disadvantage to this method is if your debt is also your largest, it may take you a long time to pay it off, thereby delaying your debt repayment process.
Paying Off Your Small Debts First
This method is considered the most effective because you get to see results faster than all the other methods. By paying off your small interest debts first, you cancel them out and move on to the next debt faster. This method also helps you stay motivated and can help you achieve your goal of becoming debt-free in absolutely no time. Another advantage is that once you clear off other debts, you have a lot of free money to redirect towards your current debts making the whole process even faster!
Taking A More Balanced Approach
You do not always have to use either of the options. It’s imperative to weigh all your options and put your debts into consideration. If you have absolute certainty that you can clear off certain debts faster and no time, then you can make these high priorities. It’s imperative to understand your debt and how best you can work in clearing it. The options provided do not always work for everyone and taking a balanced approach can help you strategize better. Arrange your debts in a way that helps you pay them off faster and efficiently.
Stay Focused And Motivated
Without determination, any strategy can fail. It’s important to remain focused and stick to the plan you choose regardless of whether you feel motivated or not. When you clear off one debt, redirect the money to the next debt and keep the cycle going until you’re eventually out of all debt. This is a great way to help you stay motivated and to help you reach your goals faster.
It is imperative to weigh all your options before choosing the best debt repayment strategy. Be well versed on everything you need to know, do adequate research and understand each strategy before you opt for it.