In the mortgage business, the topic of debt comes up constantly. Specifically clients wonder how to reduce their debt more quickly. There are many strategies out there, but trying to wade through them can be overwhelming.
Here’s an incredibly simple but surprisingly effective approach: Just pick one debt at a time and accelerate your repayment. This allows you to cut through the clutter and watch that debt disappear more quickly.
Depending on which debt you pick, one of these methods should work:
- Double Your Payment. Most experts agree that eliminating your credit card debt is the best place to start. Doubling your payments will cut in half the time it takes to pay off that one credit card.
- 10% Increase. For larger debts, such as a car loan, increasing the monthly payment by 10% can reduce the life of a 5-year loan by 6 months.
- Make an Extra Payment. For most, our mortgage is our largest debt. Do you know that you can reduce a 30-year mortgage by over five years, simply by making an extra payment per year (equal to your principal and interest)?
Sometimes the complexities of various debt types and reduction strategies keep us from taking the first step to more rapidly reducing our debt. Keep it simple – pick one, choose a strategy and watch that debt melt away!