For some people spending is an addiction which they cannot control. If you are one of them cut up your credit cards and lock away your check book; get a conservator if you have to. Like some addicts people who spend excessive amounts of money believe that they are already so far in debt that another $100 on the charge card isn’t going to change much, but that extra hundred will probably triple during its life on your card. If you really want to get rid of your debt start dealing with the debt you have and stop adding on to the pile.
Focus on High Payments
Most people will tell you to focus on higher interest which is a good general rule of thumb, but is not always right. Think of it this way; 3% interest on 10,000 is $300 a month while 10% on $300 is only 30 dollars a month. Which one would you rather get paid off quicker? Of course you want to get the $10,000 dollar loan paid off as quickly as possible, but you should also keep it in the back of your mind that the second that that gets paid off you will be putting the $300 towards your next highest payment and so on and so forth until you are completely debt free.
Lower your Interest Rates
A great way to pay off your debt quicker is to reduce as much of it as fast as possible which is pretty much impossible if your interest rates are sky high. Some loans, especially student loans, will give you an interest rate break if your pay on time for a certain amount of months; conversely if you miss payments your rates are likely to double. If your debt is mostly on your credit cards consider a balance transfer to a lower interest credit card or call your credit card company and see if they will cut your interest so you can make bigger payments in a timely manner. You would be surprised how quickly they offer to reduce your rates when it means that they will be getting their money back.
I am still on this journey myself and everything that I learn I pass on to you. You get to learn from my mistakes and my triumphs and both will teach you how to save money on the things that you need so you can afford the things you don’t. Stick with me kid and your debt will be a thing of the past, have faith in the Dollar Dad and you’ll have a little fun too.
Don’t Get Discouraged
I can’t tell you how many times on my journey I have laid in bed for an entire day crippled by the fear and anxiety of going bankrupt and never being able to give my wife and kids the things that I think they deserve. It is through power of will and determination that I have come as far as I have and I plan on continuing to go further until I am saving more money in a year than I am making (effectively doubling my income.) I hope that my determination will motivate you as well and remember that a penny saved is a penny earned but 100 pennies saved is a dollar that can go toward debt.