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Transcript of Simple Solution To Start Paying Off Debt
0:05 Hey there, Aimee Cerka here. Have you ever wondered how you can in a simple manner, start paying off more of your debt, specifically when it comes to your mortgage. For most people, that’s one of their biggest expenses. And it can seem overwhelming, but have you ever wanted that simple tip or trick that you could use to start taking that debt to the curb faster so that you can have more of your money, staying in your pocket. That’s what we’re going to talk about today.
0:47 So let’s go ahead and dive in.
0:51 So you’re wanting to save money on your mortgage put more money back in your pocket, and you don’t have a ton of extra money. So the simple thing that you can do to start eliminating more of your mortgage paying off debt a little bit faster, is to pay your mortgage bi weekly instead of once a month. So you can go ahead and split up mortgage payments, into 2 what would you pay it bi weekly. Since, because of how many weeks there are a year, you actually end up making 13 months worth of payments versus the 12 that you would only make if you paid once a month. So that one extra payment doesn’t really seem like it would make a whole lot of difference. But over time, the way the interest compounds, it’s going to add up to put more money into your pocket faster. Now, there’s a bonus little tip. If you can’t do this yet on your mortgage, which you can also do this on your rent, by the way, even if you weren’t paying it to your landlord. Just put it in a separate account for your rent account you would have a full extra rent. And that account by the end of the year, that you could use then use that extra money for something else an extra debt roll down or something, another need you might have emergency expense, something like that. But you can, this could apply to your rent, as well. But if you are thinking. No way, I can never come up with that much extra money to pay my mortgage or my rent by weekly that’s just too much I don’t have that extra in my budget right now. Then you could also use this and apply it to car loans. So, with your car loan you can also pay it bi weekly. You’re also going to save interest there as well because it’s compounded every day. Instead of just once a month. So, the more frequently you pay it. The less interest you will end up paying. So you’ve got a couple different options here. Or you can do all of them, but paying your mortgage bi weekly, or your rent bi weekly is going to start helping you to save money right away.
3:07 And if you’d like seven more tips to find an extra $250 to your budget. Then go ahead and check out the description, you’re going to be directly above or directly below this video. Depending on the device you are on. We’ll see you later. Bye.
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Aimee Cerka
The Money Confidence Coach - She helps motivated women, like you create the happiness, family life, financial security, and long-term wealth they deserve. Create unstoppable finances so that when the next curveball is thrown your way... You're prepared. Click Here to Learn More
The debt snowball method: paying your smallest debts first
Then, pay the minimum amount each month on all debts, but focus the majority of your efforts on that smallest account. Once your smallest debt has been repaid, move on to the next smallest debt and repeat the process.
This repayment strategy, sometimes called the avalanche method, prioritizes your debts from the highest interest rate to the lowest. First, you'll pay off your balance with the highest interest rate, followed by your next-highest interest rate and so on.
This involves starting with your smallest balance first, paying that off and then rolling that same payment towards the next smallest balance as you work your way up to the largest balance. This method can help you build momentum as each balance is paid off.
Consider these three common methods for paying off debt: debt consolidation, snowball strategy and avalanche strategy. These are best used to pay off high-interest non-mortgage debt such as credit cards, but can be used for other loans as well.
Start by collecting all your bills and writing out what you owe to who, and how much. Include the minimum payments and interest rates as well, and total up what is due and when. This may be an uncomfortable exercise, but the longer you delay, the worse it will get.
The debt avalanche and the debt snowball methods are two strategies for paying down debt. With the debt avalanche method, you pay off the high-interest debt first. With the debt snowball method, you pay off the smallest debt first. Each method requires you to list your debts and make minimum payments on all but one.
With a debt consolidation loan, you borrow money from a lender and roll all of those debts into one loan with a single interest rate. This allows you to make one monthly payment rather than paying multiple creditors.
While there are no government debt relief grants, there is free money to pay other bills, which should lead to paying off debt because it frees up funds. The biggest grant the government offers may be housing vouchers for those who qualify. The local housing authority pays the landlord directly.
In contrast, the "avalanche method" focuses on paying the loan with the highest interest rate loans first. Similar to the "snowball method," when the higher-interest debt is paid off, you put that money toward the account with the next highest interest rate and so on, until you are done.
To pay off $40,000 in credit card debt within 36 months, you will need to pay $1,449 per month, assuming an APR of 18%. You would incur $12,154 in interest charges during that time, but you could avoid much of this extra cost and pay off your debt faster by using a 0% APR balance transfer credit card.
1. Evaluate your balance and budget. When getting ready to pay off your debt, it's important to evaluate your debt balances and your budget. This will help determine how much you can pay, how you can balance your budget and which balances to prioritize.
1. Take account of your accounts. First things first: Make a list of all your outstanding debts. Include the interest rate on each so you'll be able to determine which ones are causing you the most financial pain.
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