How to Pay Off Debt Fast!
by Jim Kaspari
I will absolutely tell you exactly how to pay off debt fast as humanly and mathematically possible by the end of this article. Much more important questions are: should I pay off my credit card debt or other debts faster? What else can I do with my money? Which debts should I pay off fast and which ones should I pay off the minimum?
Debt is a four letter word for many of us. I know my parents were the product of the “great” depression era and paying off debt was the most important thing you could do – what a dream to have your house paid off! “Phew, I paid off my debt!” Old paradigms die hard. We get advice from very well-intentioned people meaning well, but giving advice that hurts us rather than helps us.
Today you will have a new perspective on debt. Yes, there is bad debt and there is good debt, just like anything in life. Using credit cards to pay for clothes, shoes or toys that we can’t afford or pay off quickly is an example of bad debt and is endemic in the US economy. Our ego’s, “keeping up with the Jones”, and instant gratification desires fuel this behavior. We should treat ourselves to the finer things in life that we enjoy, but earning them first gives a greater long term satisfaction.
Then there is GOOD debt. At the time of writing this article – 2017, home mortgage rates are averaging around 4%. Inflation is traditionally around 3%. If you invest in a home or refinance at this rate – you’re basically getting hundreds of thousands of use and leverage of the bank’s money for FREE!! Now that’s good debt, especially when you consider possible property appreciation, tax benefits from interest expense, tax benefits from depreciation and principle paydown.
Another example of GREAT debt is business marketing. I explain in my article on the best possible investment in the world that through tried, tested and targeted marketing tactics, you should get 200-2000% return on investment. Compare that to the measly 0-26% interest charged by credit card companies. You can also see how investing in your leveraged business creates unlimited growth in this article. Remember to focus on growth and the positive, not cutting expenses or paying off debt – your net income and net worth will both grow faster this way.
Finally, How to Pay Off Debt Fast!
This system works every time. There is no faster way to pay off your credit card debt. Set up the system, follow it and forget your compulsion to vary from the formula. This system will pay off your debt as fast as is mathematically possible and give you total peace of mind.
Gather all your most current credit card or debt statements.
List the creditor name, the total amount owed, the minimum payment and the percent interest.
Order your list from highest interest to lowest.
Determine an additional monthly dollar amount you want to pay (in addition to the minimum payment – example $200 a month).
For the creditor with the highest interest, pay the minimum payment plus the $200.
For the other creditors, pay the minimum payment only.
Once the first debt on the list is paid off, then pay the number two debt minimum payment plus the $200, plus the former minimum payment on the first debt.
Continue this process until your debts are paid off.
Key – if you have monthly expenses on any of the cards, pay them off monthly. Do not spend more than you have.
So in this example, you would pay the Target (highest interest) $200 plus minimum of $80 for a total of $280, then pay the minimum payments on Visa and Chase until the Target is paid off completely. Note -the total owed doesn’t matter in the order of payoff – this is a psychological trick on our minds, but trust the math and this system.
Once Target is paid off, you would then Pay Visa’s minimum payment of $450 plus the old Target minimum of $80 plus the extra $200 budgeted for this accelerated debt paydown for a total of $730 and pay the minimum for Chase. Note again, this payment sounds like a lot, but you’re not paying any more per month towards your debt, yet paying it off more rapidly now!