Credit Info How Fast Should You Pay Off Your Debt? Read the Article Open Share Drawer Share this:Click to share on Twitter (Opens in new window)Click to share on Facebook (Opens in new window)Click to share on Tumblr (Opens in new window)Click to share on Pinterest (Opens in new window)Click to share on LinkedIn (Opens in new window) Written by Chelsea Dehner Published May 17, 2013 3 min read Advertising Disclosure The views expressed on this blog are those of the bloggers, and not necessarily those of Intuit. Third-party blogger may have received compensation for their time and services. Click here to read full disclosure on third-party bloggers. This blog does not provide legal, financial, accounting or tax advice. The content on this blog is "as is" and carries no warranties. Intuit does not warrant or guarantee the accuracy, reliability, and completeness of the content on this blog. After 20 days, comments are closed on posts. Intuit may, but has no obligation to, monitor comments. Comments that include profanity or abusive language will not be posted. Click here to read full Terms of Service. Save more, spend smarter, and make your money go further Sign up for Free Unfortunately, there is no quick fix to eliminate debt. Not only does it take patience, time and diligence, but also a clear understanding of why we get ourselves into debt in the first place. Was it that our wants were greater than our means? Was it thinking we could pay down our debt, only to realize after our bills, we had nothing left over? Determining how fast we can and should eliminate debt starts with a few simple steps. Write it down. Get a visual handle on where you are with your mortgage, home equity, auto, medical, student loan and credit card debt. List on each line the lender, balance, current interest rate, rate change date, final interest rate, minimum payment, monthly payment and due date. You can’t fix it until you face it. [Related Article: The First Thing You Must Do Before Paying Off Debt] Understand your cash flow. We can’t save, invest or pay down debt until we clearly understand what funds are coming in and what funds are left over after we pay our taxes and living expenses. When you enter what comes in and what goes out, subtracting them allows you to see whether you have a monthly surplus or deficit. A surplus indicates you are living within your means. A surplus allows you to save, invest or pay down your debt. A deficit indicates you are living above your means and most likely using your credit cards. If that is the case, review your monthly living expenses to determine what can be reduced or eliminated. It is important to be realistic. If you have not figured in all your expenses, such as the $2.29 daily iced coffee, you’ll be tapping your credit card once again by month’s end. [Related Article: Can You Really Get Your Credit Score for Free?] Reduce your debt. Once you’ve examined your cash flow and determined what is left over after your taxes and living expenses, you will know how much is available each month to pay towards eliminating your debt. Additionally, now that you have written it all down and recorded the minimum payments, you’ll know what you must pay. If the minimum payments total more than the surplus available, you’ll have to go back and start eliminating some of your discretionary expenses. If the total is less than your surplus, you can pay more than the minimum. Just be careful not to get over-zealous. Paying beyond the minimum payment could leave you short of cash at the end of the month, forcing you to pull the credit card right back out of your wallet. Another strategy to consider when reducing or eliminating debt is to pay the smallest balances off first and pay the minimum on the rest of your debt. Although you may save some money tackling the highest rate debt first, the mental relief that comes with paying off each debt burden far outweighs saving a few dollars! [Related Article: Credit Reports Vs. Credit Scores: What’s the Difference?] Avoid future debt. Part of the reason we get into debt is because we don’t save! Start an automatic transfer each month into a savings account. In order to live within your means and not have credit card debt, it is critical to have a petty savings account. A petty savings account will hold money you are setting aside for pleasurable things like vacations or home improvements. Seek professional guidance. The best approach to determine how fast you can and should eliminate debt is to work with a Certified Financial Planner™. These individuals are highly trained and specialize in improving the financial well-being of single professionals, couples and families. (Full disclosure: I am a fee-only CFP® and a member of the National Association of Personal Financial Advisors, a group of financial planning professionals.) “How Fast Should You Pay Off Your Debt?” was written by Kelly Trageser and was origianlly published on Credit.com. Save more, spend smarter, and make your money go further Sign up for Free Previous Post 9 Things Your Homeowner’s Insurance Might Not Cover Next Post The “Anti-Housewife” Credit Rule Gets Axed By the CFPB Written by Chelsea Dehner More from Chelsea Dehner Browse Related Articles Credit Info How to Negotiate with Credit Card Companies Debt How to Consolidate Credit Card Debt Debt 7 Simple Things You’re Doing Wrong When Paying Off De… Housing Finances Should You Take Out a Second Mortgage? Credit Info Personal Expenses Management – How to Tackle Your… Debt 10 Steps to Paying off Your Debt Loans How to Use a Personal Loan to Consolidate Debt Credit Info Are You in the 45%? 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