How to Pay Off Debt Quickly

by : Jason Holmes

Debt elimination should however be done in accordance to the Fair Debt Collection Practices Act; Fair Credit Billing Act and Uniform Commercial Code.

How to Pay Off Debt Quickly
Use The Debt elimination approach:

A borrower may opt for any one of the following approaches for debt elimination. Experts have recognized two ways of eliminating debt. It may be mentioned here that prior to opting for a debt elimination process, the borrower should realize the importance of doing so. He should understand the graveness of the situation.

1) Approach 1 on how to pay off debt quickly
Eliminate debt accounts with higher rates of interest.

In this method, quickly settle all the debt accounts with higher rates. Example

  • College loan USD$20,000 and IR (Interest rate) is 5%
  • Computer loan USD$2,000 and IR is 10%
  • Car loan USD$3,000 and IR is 4%

According to the first approach, debt account for the computer loan (10%) must be settled first because it has a higher interest rate, followed by the college loan (5%) and then the car loan (4%).

Desirable settlement will be settle the debt account with 10% interest rate followed by 5% and 4% thereafter.

2) Approach 2 on how to pay off debt quickly
To eliminate debt accounts starting from the smaller unpaid amount to the larger ones. Example:

Let us take the same example; here we concentrate on the unpaid amount and not the IR.

  • College loan USD$20,000 and IR (Interest rate) is 5%
  • Computer loan USD$2,000 and IR is 10%
  • Car loan USD$3,000 and IR is 4%

The second approach is reducing the debt from ascending order of unpaid amount. So, the Desirable settlement as per the second approach is to settle the debt account with unpaid amount USD$2,000 followed by USD$3,000 and USD$20,000 thereafter.

Nine Secrets on
How to Pay Off Debt Quickly

Follow these 9 steps and you can easily eliminate your debt and become debt free.

  • Expenses should be less than the income
  • Expenses should be based on a proper budget
  • There are many saving and investment options and people can opt for options like CDs or Certificate of Deposit, Savings account and MMAs or Money Market Accounts.
  • Only use one credit card.
  • Prioritize expenses
  • All payments should be made on time so that there is no scope for default or late fees.
  • Dont fall into schemes having tag 'pay later, buy now'.
  • Be aware of the hidden costs while buying a policy or plan.
  • More money should be kept aside for retirement fund.

How to Pay Off Debt Quickly
Beware of the 'Good Samaritans'
While debt Elimination is an effective way of reducing one's debts but this may not be always true. The reason being there are many agencies offering help to debtors to make them debt free. Some of these companies opt for illegal methods of debt elimination. 

There are many debt elimination agencies claiming that they will bail out individuals from debt traps. When their services are hired, they will only give you more debt. They may say that the expenses made through credit cards are not legal and one has to shell out more money to settle the account.

There are others who for a fee of USD$2,995 assures the borrowers that they do not have to pay up any money but at the time of settlement, they fail to keep their word.

These good Samaritans make use of the 'uninformed' condition of the borrowers and trick them into fraudulent activities. It is important that you shop around and do your own research.