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What is the best way to pay off debt?

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asked Nov 30, 2015 in Finance by danj08
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2 Answers

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https://www.youtube.com/user/DaveRamseyShow

 

Don't be a slave to debt. Dave Ramsey has a great show and many great guides to paying off your debt. My favorite is the Debt Snowball plan. It teaches you how to pay down your debt and stay out of debt. No, it's not easy, and it took you many years to get into debt so it only stands to reason that it can take you many years to get out of debt.

 

Debt Snowball Plan

The principle is to stop everything except minimum payments and focus on one thing at a time. Otherwise, nothing gets accomplished because all your effort is diluted. First accumulate $1,000 cash as an emergency fund. Then begin intensely getting rid of all debt (except the house) using my debt snowball plan. List your debts in order with the smallest payoff or balance first. Do not be concerned with interest rates or terms unless two debts have similar payoffs, then list the higher interest rate debt first. Paying the little debts off first gives you quick feedback, and you are more likely to stay with the plan.

 

Sources:

 

https://www.daveramsey.com/blog/get-out-of-debt-with-the-debt-snowball-plan/

 

http://www.daveramsey.com/specials/welcome?ectid=gaw.daveramsey-brand1

answered Dec 1, 2015 by Countrymom (8,550 points)
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Living with debt is stressful. The first step toward financial freedom is to create a budget [1]. Write down how much you make and how much you spend. Figure out how you can spend less each month so that you can apply your savings toward paying off your debt. 

 

Once you have a plan, start paying off the largest debt first. This means that you should target the credit card that has the highest interest rate. Make weekly payments and always pay more on the card than is due. Keep in mind that while you are doing this, you still need to make the minimum payment on the rest of your cards as well [2].

 

This is a long-term strategy, so it is important not to get discouraged. While you may not pay off an account quickly, you will make good progress.

 

References:

 

[1] http://money.usnews.com/money/personal-finance/slideshows/10-easy-ways-to-pay-off-debt

 

[2] http://www.clearpointcreditcounselingsolutions.org/how-to-pay-off-debt-efficiently-the-ladder-method/

answered Dec 2, 2015 by Unckelli (50,310 points)

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