It’s possible! If you have decided to act step by step, you can eliminate all your debts.
What do you need? Time, determination and follow these two steps.
Step 1: Accelerate your payments
Establish a monthly program that allows you to finalize your debts in advance. Is it difficult? Clear. The point is to coldly analyze their current expenses, to discover that you can avoid or postpone, and allocate these resources to this plan. It is ideal to reach 10% of their income.
To do this, incorporate large expenditure categories such as education, entertainment, housing, transport, store, credit card payment, etc. Ask yourself: Why spend more money?, Spending far more on the more I earn?, I’m saving to fulfill my dreams, found my own company or retire young? How much is to be spent every month on interest? What percentage of my income is committed to the payment of debts?
The answers to these concerns can help to reduce expenditure in every category. Review it again and again. Remember that everything is important and none is a priority.
Step 2: Eliminate debt
Best way to start a plan to eliminate their liabilities is to know how much is actually owed. The very first step is to list all your debts. Then perform the following exercise recommended by True Credit:
1. For each debt, divide the total balance of credit over the monthly payment or the mandatory minimum, which will tell you how long each charge is settled.
2. Sort and list your debts starting with the nearest payments. The debt which is the No. 1 has less time to be fully paid (e.g., loans which are in their final stage of payment or short term). In the latest issue of its list is the provision of more time; probably is the mortgage on your house.
3. Each month, the minimum payment to cover all of the debts as they were doing.
4. In the case of Debt No. 1 on the list plus the minimum payment, it should cover a slightly larger amount, as recommended in “Step 1: To accelerate the payments.”
5. Repeat this every month until you’ve fully paid debt No. 1.
6. Once settled, continue to cover the minimum payment on each debt, except in Debt No. 2 on the list as it will cover the minimum payment plus the extra set in Step 1 plus the minimum payment by your Debt No. 1 (now indoor).
7. Repeat the process every month until you’ve fully paid their debt No. 2.
8. Continue to cover the minimum payment on each debt, except in Debt No. 3, which will cover the minimum payment plus the additional Step 1 plus the minimum payments on their debts accounted No. 1 and No. 2.
9. Repeat, month after month, until you’ve fully paid their debt and continue to No. 3 with the following.
The goal is to cover all your debts when you used to spend 10% of their income, this time not to pay, if not to save.
Precautions
True Credit is tempting to argue assigning the No. 1 to the debt with higher interest rate. Please do not do it! The strategy is to concentrate resources on the first pay debts with the shortest maturity, where the ultimate goal is to liquidate everything.