If you have to pay off multiple debts, you are not the only one. Thousands of people have more debts than just one credit card. How do you manage these debts without missing any installments and spring the least on interest?
There are several ways and methods to pay your debt systematically. However, there are some debts you should prioritize over others as it will be more beneficial for you. Make sure you at least clear one installment in a month; this will gain momentum and will clear off your debts quickly.
To know more about how to pay off your debts as soon as possible, get legal advice from an experienced debt defense lawyer. A lawyer will help you figure out how to pay off your debts without breaking the law or causing complications.
Tips on how to prioritize your debt
Make the highest interest debts your priority.
Considering all your debts, compare the debts with the highest interest rate to the lower ones. Now list them out systematically and start from the top. Clearing the highest interest debts saves you more money that can be used for your future finances.
However, starting with the highest interest debts requires you to pay more initially. So you might have to make some sacrifices and cut down on expenses. But if you look at the bigger picture, the sooner you clear these debts, the less interest you will have to pay.
So even though the start might be a little rough, this is quite beneficial in the long term.
Clear the smallest debt first.
If you do not want to get into paying large sums, you can always start with small debts. The process is similar to the above method; however, instead of listing your debts from highest to lowest, arrange them in a most inferior to the highest form.
Then start paying the small installments of the debts; this will give you a good start and eventually a steady flow. With time, you will quickly pay off all the debts if you maintain consistency.
Pay debts that impact your credit score the most
Another way to pay off debts is to target the ones that affect your credit score the most. Once you identify those debts, start clearing them as soon as possible. This will increase your opportunities for lower APRs and a higher spending limit.
Nevertheless, focusing on increasing your credit score will require significant lifestyle changes and replacement in expenditures. Most people fail to maintain consistency and lose their chance to secure future finances and better financial investments.