How To Get Out Of Debt Faster

Filed in archive Credit , Finance on July 18, 2010

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Having debts can really be a source of pain and can ruin your health. It can cause you stress which in turn can lead to illnesses like high blood pressure, heart ailments and diabetes. Debts can also ruin your relationships. Many previously happily married couples break up when money problems start to take more and more of their time together.

And of course, debts can certainly ruin your credit score. This makes it difficult for you to get financing for important things like your home and stop you from saving for your retirement.

Here are some steps you can take to help you clear your debts as quickly as possible:

1. List down your debts.

Get a copy of your free credit report and write down each debt starting from those with the highest interest rates. You may have to gather up previous statements of your different accounts to figure out how to correctly list down everything you owe.

2. Figure out how much extra money you have.

Paying out only the minimum amount due on each of your debts will keep you bogged down for a very long time. Try to find any extra money you have and then use it to pay off debts.

3. Pay off debts with the highest interest rate first.

Use all those extra money you found to erase off the debt that has the highest interest rate first. However, do not forget to pay off at least the minimum for all other debts you have.

4. Roll over your extra cash to pay other debts.

When you're done paying the debt with the highest interest, move on to the one with the next highest interest rate. At this point you will have more extra money than you had before because you've already cleared off the first debt. Use all that extra money to pay off the next debt. This will certainly increase the rate at which you can get rid of all debts you have.

5. Repeat the process until you're free of debt.

Work your way down your list. Cross off each debt you have paid off and then move on to the next.