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Thursday, September 08, 2005

Debt Stacking - Fast Track Out of Debt

You go to the mail box and scan - a couple fliers (nah), yourmagazine subscription (yes!) and bills (groan). Every month thebills show up and as you sigh and take out your check book youwonder if you will ever be free.
Each month you pay the minimums and although you KNOW you've gota handle on it - you are not charging your credit card oraccumulating new debts anymore - it seems that you will be payingthe minimum fees forever.
Did you know that HOW you pay your debts can affect how soon youwill finishing paying them off - even if you keep paying the sameamount for debt every month? Of course you might be able to get aconsolidation loan, but if you're not eligible or are notinterested then there are several other things you can do.
It's not always the easiest to figure out the mathematics, butthere are three steps to quicker debt relief - guaranteed.
STEP ONE - Create a list.
List your smallest debts first followed by your largesthigh-interest debts (credit card) and then your largestlow-interest debts (Lines of credit and taxes).
Plan to pay the minimums on all debts with these goals in mind:
STEP TWO - Small bills first.
They may not be the highest interest, but every bill that you arepaying some interest on means you are usually only paying minimalamounts on the principal. Multiple debts are also a sure way tobring your spirits down. Paying off small debts first is a quickway to start checking them off - and freeing your mind.
STEP THREE - Move the payments along.
When one debt is paid add the funds to the next debt. Forexample, say you're making $75 payments to a small debt. When thedebt is cleared add the $75 to the next debt on your list. If thenext debt had a minimum payment of $100, you will now pay $175until it is paid off. When that one is finished, take the $175and add it to the next payment and so on.
STEP FOUR - Save the cash!
Don't forget that when your debts are cleared you have setyourself up for a better financial future. The best way to takeadvantage of your new situation is to use all the money you werespending on debts and start investing or saving it every month.
With this strategy your debts will clear faster meaning you willpay less interest, you will see progress as you clear small debtsfirst, and you will not be tempted to use the funds for personaluse instead of debt repayment.
It is a worthwhile goal to get out of debt. Seeing that goal comesooner and teaching yourself discipline sets you up for abrighter financial future. You OWE yourself that!


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