Everyone tends to believe that debt is bad. It is not the debt that is bad but what we choose to do with it and how sometimes, we make the wrong choices. Making mistakes is part of life. What is important is how we choose to deal with them and handling debt is no exception. If you want to pay off debt, you need to be disciplined and dedicated.
Which Debt Should Be Prioritized
The first thing to do when starting your journey to become debt-free is to understand which type of debt you should address first. A mortgage should be the last thing on your mind. Car loans and personal loans are important but the main focus should be on credit card debt. The problem with credit card debt is the interest rate you have to pay. The API or yearly interest you pay on a credit card is usually twice if not trice than the one on a personal loan or a car loan. Also, the amount you owe for a credit card is generally smaller than for other types of loans.
Getting Started
Now that you know which type of debt needs to be prioritized, you need to focus on that first. To pay off your debt you need to pay it off one debt at a time. Trying to pay off multiple loans at a time is counterproductive. What you want to do is to eliminate a monthly payment. The moment you pay off your credit card, you free up some cash that you can use towards the next loan in line. This creates what financial experts call a debt snowball. The moment you pay off one loan, the next one becomes easier and the goal to pay off debt suddenly becomes achievable. As long as you have the discipline and dedication, becoming debt-free is no longer an unattainable dream.
