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How To Pay Off Debt

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Almost every American adult has debt. Often, this debt becomes so overwhelming that it seems impossible to ever get out of. In fact, many people never get out of it. It continues to build and more and more income goes up in smoke by paying interest to the lenders. Money issues are the number one cause of stress and marital arguments. Excess debt only exacerbates the problem. Fortunately, it is possible to pay off debt and never acquire it again. Granted, many people prefer to live above their means by holding a mortgage and a car loan, but this debt can also be paid off much earlier than is done by most.

The first step in paying off debt is creating a plan. This plan must consist of three separate points:

• Stop buying on credit and stop increasing debt.
• Have money in savings for emergencies.
• Pay-off current debt.

To help you stop bringing on new debt, it is important to get rid of all credit cards. Credit cards are not a necessity of life, and they hold some of the highest interest rates of all debt. Do not take out any new loans. Pay off your car loan before buying another. Save enough money to take care of any emergencies. For most people, $500 to $1,000 in savings is adequate to cover emergencies.

The next step in paying off debt is to list debts owed. Rank the debts in order of the interest rate you are paying on the debt. Make the minimum monthly payments on all other debts, except the one with the highest interest. Pay as much as you can possibly afford on this debt until it has been paid-off. Find the next-highest-interest debt and then work on that one.

Paying off debt is not an instantaneous process. It may take years to accomplish. However, it should be noted that no outside agencies are ever needed. If you do want to accept help, go to a non-profit, state-sponsored debt-consultation company. Sometimes these companies can help to lower your current interest rates or establish a one-time settlement to take of the debt.

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