Best way to pay off debt

12 comments

1. Get it paid off asap. If you have an emergency and need money you can take out a new loan.

2. First off – is your spending under control now or is your debt still increasing? Stop all extra spending until your debt is no longer increasing.

   Next – you’re pretty vague so this will be vague advice. In general, build up an emergency fund that will cover a few months of bills in case you both lose your jobs suddenly or there’s a major home repair expense. Never touch this money unless it’s an actual emergency.

   Once your spending is under control and you have some dedicated funds for emergencies.. Now focus on your debt. There are lots of ways to do this. You can pay 100% of your extra money towards debt, or use some percentage for debt and some for life / fun.

3. More information is needed here (income, size of debt, interest rate, can it be deferred or refinanced, is there more than one loan, what is the best payoff order, etc). Probably more than you’re going to be comfortable sharing. Might be worth speaking to a financial advisor.

   Most people will wisely advise you to get out of debt as fast as you can, but only you can decide how much of your life you’re willing to put on hold for that. Also, this is the period of your life in which you have a lot of expenses and less disposable income, so borrowing is logical. When you’re older, paying off debts will become easier, but not if they’re growing.

4. As much as i hate Dave Ramsey, follow his first 3 baby steps and you’ll be out of debt and have a more secure financial picture

5. Pay it off. Don’t take yourself to 0 every month buy you need to pay as much as you can on it as often as you can. Every month you pay the bare minimum you lose money in the long term because you’re losing a chunk to interest. I have credit card debt that I am paying off this year. If I pay the bare minimum it would take 15 years to pay off and would I would be paying an extra 1500 in interest. Doesn’t seem worth it when I have the option to get it out of the way. Sure it means tighter budgeting upfront but in the long run there are more benefits

6. Know that credit card minimums are calculated to take many years, if not decades to ever pay off. To be honest, most people paying the minimums never seem to pay it off because they typically add new charges as time goes by. They fall into a trap of living with those payments as a regular monthly piece of the budget forever. That debt hangs on your neck like an albatross, taking money out of the budget. Once it is finally gone, it’s like you have new money.

   The /r/personalfinance sub has a ton of information–don’t miss their massive wiki.

7. The longer you take to pay off your debt, the more you will pay in interest.

   More details would be helpful here. Personally, I treat something like credit card debt as an emergency. If I can’t pay off the full balance every month, I tighten up my spending until it’s gone.

   However, if you’re just starting out and you have some student loan debt with a low interest rate, you might pay that off less aggressively while you build up your credit score and get yourself more established.

8. First of all either cu your credit cards in half or lock them up and quit using them.

   Then start working on paying them off. The minimum payment will only cover the interest (which is what they want – keep you in debt) so no, that’s not a good way forward.

   Then start dropping unnecessary monthly subscriptions like more then one streaming service or eating out too much.

   You just need to wake up and smell the coffee. Sounds like your living above your means.

9. Dave Ramsey method works.

   One of his tips…. pay off the smallest debt first. Then double up and pay off the second lowest debt.

   We don’t like to pay interest. Such a waste of money. We agreed early in our marriage to pay as we went along in life. Use credit cards for convenience…..not because we could not afford something.

   Most people have credit card debt because they compare themselves to someone else. Welllllll…. they might have more stuff. I have a bigger savings account.

10. You’re probably hemorrhaging money on consumer debt interest. Pay off any credit cards first.

11. Pay it off. Check out Dave Ramsey and the snowball method of paying off debt.

12. I always tell clients it depends on the interest rate of the debt. My car loan is 2.5% interest. I would never pay that down because I can do better than 2.5% with the money. Once debt is above 5% you have to start thinking about paying it down though. Treasury bonds are always a good indicator. If you make more buying bonds (at the moment it’s 4.8% yield) then why would you ever pay down that cheap debt.