You should pay off any debt that you have as quickly as possible. Doing this will enable you in the future to have more money to save and invest when the debt is paid off. To pay off my debt, I use the Debt Avalanche method. This method recommends paying off the debt with the highest interest first and then move on to the next. Some of the typical debts that you might have, including myself, are credit cards, student loans, and car loans.
Credit Card Debt
I have recently paid off my credit card balance of $1000. In my opinion it wasn’t much but it was good to pay off so I won’t have to pay anymore money in interest. Credit card debt is usually the highest interest debt that you would have. So I recommend paying this debt off first.
About a month ago I bought a 2013 Chevy Camaro and pulled out a loan for it. The loan has a 6% interest rate, so this is my highest interest rate debt. I am actively paying well above the minimum monthly payment to have the debt paid off as quickly as possible. The target payoff date is in one year. If you currently have a car loan, I think you should pay it off as quickly as possible.
Most young people, like myself, have student loan debt and wish we didn’t. My student loan debt has the lowest interest rate at 4.69%. Currently I pay slightly above the minimum payment so I can focus more money on my car loan, since it has the highest interest rate.
With debt being paid off, you will have more money to save and invest. I do believe in saving and investing while paying down debt, especially if you are young. Just make sure the bulk of your money is going towards paying off debt. This will only help you in the future to enable you to get this money.
One thought on “Why You Should Pay Off Debt FAST!!!”