Money Date – Debt Elimination
Welcome to the Daily Juice Show, where we discuss just one “ingredient” of the complex money topics you face.
Everyone’s favorite topic. Or maybe not. But we still have to face it. Let’s lay it all out and figure out what to start paying off first. Identify and make a list of what debts you have. Include everything. Credit cards, student loans, mortgages, private loans, auto loans. Everything.
The next step is to figure out what will give you the biggest boost. From a financial perspective, it’s smart to pay off your highest-rate bad debt first. After all, putting $500 towards a $3,000 credit card bill with an 18% interest rate will save you far more than paying off a $500 bill at 6%. That said, it can be worth prioritizing that smaller bill if you’ll gain a lot of psychological satisfaction from wiping a debt out in its entirety.
Once you have you list of debts, let’s think about what can we apply extra on the top of your minimum payments. That’s called “Snowballing”.
Can you benefit from refinancing your debt? That means you look for opportunities to get better interest rate. Credit cards offer transfer balance options for short period of time. Student loans can be consolidated and refined. Mortgages can be refinanced.
Look for opportunities which will allow you to pay off your debts faster.
Once you free up additional cash flow from the payment of these debts, you open up the option of funding future goals. How cool would it be if you didn’t have to pay debts anymore?
Until next time, remember: It’s your money, and your future wealth, just one sip at a time.