Today, I want to first talk about the different types of debt we can get ourselves into, and second work out a strategy to get rid of it. Being out of debt means you can finally save towards your goals.
The category of debt that you want to get rid of first is your high interest debt, such as credit cards, or payday loans. Those will be charging you the most “money for nothing” aka high-interest rates.
The second types of debt might be your car loans or your personal loans, where the interest rate won’t be as high.
The third type is probably the type of debt that you might be using to generate an income from, for example for a property, or maybe it’s your home loan. Those have usually lower interest rates and should be on the bottom of your debt priority list.
You’ll want to start with the high-interest debts first. To pay them off as quickly as possible, you should put money towards them each week. You don’t want any extra money go back into discretionary spending. Instead, put it towards the next type of debt. In that process, you’re going to accelerate the rate at which you’re getting rid of your debt. And you’ll see that you’ll get rid of it faster than you might have thought. Now, you can start putting money aside towards your big goals.
I’d like you to think about this for a minute: What’s your highest priority debt that you want to tackle right now? Let me know in the comments.