The key to crushing your debt is establishing a payoff date, says ramit
t. Because a high interest rate on your debt can tack on hundreds if not thousands of dollars, it's almost always worth it to put extra money toward paying it off before investing.
"A plan turns debt from a 'hot' emotional topic to a 'cool' math problem," Sethi writes."Most of all, a plan gives you control." Most people don't know how much debt they owe and are just blindly paying the minimum to get by, Sethi said. Because student loans often carry much lower interest rates than credit cards, Sethi recommends stamping out the consumer debt first.
In order to establish a payoff date, Sethi suggests creating a spreadsheet listing each credit-card or student loan, total debt owned, the annual percentage rate or interest rate, and the minimum monthly payment.— the former prioritizes paying off the smallest debts first and usually provides more of a psychological benefit, while the latter prioritizes the debts with the highest interest rates.
"Bottom line: Don't spend more than five minutes deciding. Just pick one method and do it," Sethi said."The goal is not to optimize your payoff method, but to get started paying off your debt." Next, call up your bank and ask if they'llThe final step is figuring out how much you can afford to pay each month and where it's going to come from, such as automatic savings transfers or paycheck deductions, he said.
Once you know exactly how much you owe, your interest rate, and how much you'll be paying every month, plug those numbers into an online calculator, or just call up your bank, to find out your payoff date.
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