Debt is incredibly common. In an ideal world, we’d all have enough money in our savings accounts to pay for everything we needed in life. However, the reality is that most of us will need to seek out financial support at some point, whether it’s to help us pay for college, or to buy a new house. Unfortunately, without the right strategy in place, debt can quickly become a serious source of frustration and stress. That’s why it’s so important to plan out how you’re going to handle your debt as quickly and efficiently as possible. Here’s what you need to know to get started.
List Your Debts
The first step in setting up a comprehensive debt repayment strategy is listing and understanding all your debts. If you can see all your debts in one place, you can get a better insight into which repayments are making the biggest impact on your budget, and which debts need to be paid off as quickly as possible. You need to learn how to understand your monthly statement to create a list. On your list, include information about the interest rate, minimum repayment amount, and the total amount you owe. Once you have your list, rank them in order of how quickly you want to pay them off. The strategy you use to rank your debts may vary based on your goals. Some experts recommend paying off the smallest amount first, while others suggest focusing on the debt with the highest interest rates. It’s up to you to decide which strategy works best for you.
Look at Your Options
Once you have your list of debts arranged in the order you’re going to pay them off, start exploring your options for reducing and simplifying repayments. There’s a good chance one of the most significant debts on your list is likely to come from your student loan. The average student loan debt in the US is around $40,000, which means many students have many different bills, loans, and interest rates to juggle. If you have multiple debts, consolidating everything into one repayment can help to simplify the process of paying what you owe, and reduce your costs. Alternatively, you could consider combining your loans if you have various private, and federal student loans to deal with. Use guides and articles online to guide you through the process of making the right choice based on your situation.
Implement and Stick to Your Strategy
Finally, with your plan of action in mind, it’s time to get to work. Start implementing your new repayment strategy and pay attention to your progress. Every so often, go back to your loan strategy and ask yourself how far you’ve come, and whether there might be something you can do to drive results faster. Remember, paying off debt can take a lot of time and effort. You’ll need to be patient, and you may even need to adapt your strategy from time to time as changes happen in your life. However, if you commit to taking a proactive approach to getting rid of your debt, you can improve your self confidence and you’ll find you’ll be saying farewell to your loans faster than you ever thought possible.