Eliminate Debt Quickly
Are you desperately looking for a way to eliminate debt? I'm going to share an idea to help you pay down your credit cards, car loans and mortgage much more quickly than you ever thought possible.
Understand that financial abundance can't be attained while you're drowning in debt. You need to get it all out of your life and then keep it out.
When I used to be a financial planner, I helped hundreds of families eliminate debt without needing to get another loan.
What I found is that most people only pay the minimum or a little over the minimum payment on every credit card they have.
If you're doing this, you'll be in debt forever.
You need to use a system that will accelerate your pay-off date.
There's a method called "debt stacking" that will help you do this.
Eliminate Debt With Debt Stacking
Here's how debt stacking works:
Get out all your debt statements. I know, I know… This is already sounding terrible ;-) But, you want to be debt-free, right? Then let's get going.
First, list the names of each mortgage or car loan company and each credit card. After each name, write down your balances, minimum payments required and interest rates.
At the end of each line, write down any amount you may be paying extra (over the minimum payment required) for each debt. For example, if you have a VISA credit card that wants $50 a month from you, but you're paying $75 each time, write $25 at the end of that card's line.
If you are paying more than the minimum on two or more of your debts, add up the total of how much money you're paying extra (above and beyond the total of all your minimum payments added together).
This number is called the "acceleration amount" and is vital to how quickly you're going to eliminate debt. If your minimum payments add up to $550 but you actually pay out $800 each month, your acceleration amount is $250.
If you don't currently pay more than your minimums, you're going to need to find a way to budget an acceleration amount. If things are extremely tight for you, can you free up at least $25 over your total minimum payments each month? The debt stacking method will help you eliminate debt much more quickly than you're currently on track for even if $25 is all you can start with.
Of course, if you can free up $50, $100 or more, you'll eliminate debt much faster.
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OK, you've come up with an acceleration amount you'll use with the Debt Stacking Method.
Now, list your debts from the smallest balance on down to the largest balance. You're going to start with the smallest debt first, which is most likely a credit card.
On all the credit cards, car loans and mortgage below that one, pay only the required minimums.
The next part of debt stacking is going to require discipline on your part.
After the first credit card is paid off, take the full amount you used to pay on it (minimum plus the extra $50, $100, etc) and add that to the next debt on your list.
You can't take this money and go spend it somewhere else.
You'll be in debt bondage forever.
Stay disciplined with this plan and it will work for you.
When the second debt is paid, add the total you were paying on it to debt #3. Keep doing this until all your debt is gone.
Here's an example:
For example purposes, let's say you have budgeted $100 as your acceleration amount to help you eliminate debt. You'll start by paying credit card #1 $165 each month (the minimum of $65 plus $100 acceleration amount) and then pay only the minimums on the next four debts.
When card #1 is paid off, you now add that $165 to the $115 minimum that credit card #2 wants. This means you'll now pay card #2 $280 each month. By the time you get to your car loan, you're paying your entire $1,120 debt budget to your car loan!
Do you see how fast you can eliminate debt once you get this ball rolling?
Are you realizing the power of this strategy as each debt is eliminated? You're hitting each successive credit card with a higher payment, thus being able to eliminate debt much more quickly. It goes slow until you get the first couple paid off. Have patience and you'll be out of debt in no time.
When I used to help clients during my financial planning days, some would be on track to be out of debt in 50 years. Once I showed them that they could eliminate debt in 3, 4, 5 or 10 years, depending on the situation, they called me a friend from that point forward.
I didn't use a mortgage in this example, but imagine a figure such as $1,120 a month to add to your mortgage. How long would it take to eliminate that debt from your life at that pace?
Pretty exciting, huh?
Debt stacking works. Put this plan to work for you. Eliminate debt. Add financial abundance to your over-all life abundance pursuits.
Change your life,
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