A Faster Way To Eliminate Debt
If you've ever tried to pay off multiple debs
simultaneously, you may have realized that sending slightly
more than the minimum payment amounts each month is an
exercise in futility. As the months go by, the balances
seem to decrease at a snail's pace. Fortunately, there is
an easier and much more efficient way to get out of debt;
it's called Accelerated Debt Payoff.
Accelerated Debt Payoff, also known as Debt Stacking, is a
time tested method of rapidly paying down multiple debts.
You will pay far less interest with debt stacking, and will
pay off the balances much more quickly. Debt stacking is
incredibly simple; if you know the interest rates you are
paying on your current debts, you can begin using it
immediately.
After you have a clear picture of the number of credit
accounts you have open and the total monthly amount of your
payments, the next step is to rank your debts by interest
rate from highest to lowest. Each month you will pay only
the minimum amount for all debts except the one with the
highest interest rate. To this account, you will apply the
difference between your normal monthly payment and the
money you have applied to the other accounts. For example,
say you have 8 open accounts, and you have been paying an
average of $600 every month towards the debts. If the
total of the minimum monthly payments toward the seven
lower interest rate accounts amounts to $200 per month, you
would pay $400 toward the account with the highest rate of
interest.
Once your most expensive debt is paid off, it's time to
focus your attention on the second highest interest rate
account. You will pay the minimums on the lower interest
loans, and apply whatever remains of your $600 monthly
payment to the most expensive debt, and so on. As you
continue to systematically pay down the most expensive
debt, the rate at which the total debt is erased is
constantly accelerated. Soon, you will be pleasantly
surprised to find your debt completely eliminated.
What if you have already taken out a debt consolidation
loan? You can still use a slight variation of debt
stacking to accelerate the repayment of your debt. If your
monthly payment for the consolidated loan is $200, and you
were previously paying $500 per month toward your debts,
applying even a small portion of the remaining $300 toward
repayment will have an amazing effect on the rate at which
your debt vanishes.
Armed with this information you can eliminate debt more
quickly, and your money will doing all of the work, while
you reap the benefits. If you go about debt repayment
without a good plan, it could take you years to become debt
free if you ever do. Accelerated debt payoff is a simple
and effective method that you can use to improve your
financial outlook in the shortest possible amount of time.
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Gregg Pennington writes articles on a number of topics
including debt, credit, and online lending. For more
information about debt and credit visit
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