Financial Smarties: Simplify Your Debt

Now you know how much you owe, how much you spend and you verified you haven't missed anything by pulling your credit report.  Having all that information is a great start to a smarter financial future, but depending on your own personal situation you may be finding a few discoveries you aren't happy with.  Don't despair and don't get overwhelmed. In fact, that's our goal - to simplify our finances.

• If you have lots of different loans and credit cards that you owe, simplify by paying down or consolidating your debt.

• If you find you spend more than you earn, simplify by cutting back your expenses.

• If you found your credit report has collection accounts or incorrect information, simplify by cleaning things up.

Today's post we'll talk about paying down and consolidating debt. 

If you currently find yourself with multiple debts and trying to make extra payments but getting nowhere, try this method.  Take your list of debts and put them in order of total amount due. Starting with the smallest debt, put whatever extra money you may have towards that debt and only the minimum toward the rest.  Once that smallest debt is paid off, take what you were paying on it and put it toward the next debt up on your list. By paying the smallest debt off first it gives you a faster win and starts the simplification process rolling.  

So what if you don't have extra money to pay down debt?  A debt consolidation loan may be your answer. Debt consolidation combines debts (usually unsecured) such as major and store credit cards, small personal loans and other bills into one loan leaving you with one payment, usually at a lower fixed payment than the minimum payments combined.   

Remember, if you are going to pay down or consolidate debt, it will only simplify your financial life if you don’t run up those bills again. It's a good idea to keep one card that you use as needed and pay off each month.

Be sure to catch our next post where we will discuss simplifying expenses.