What Is the Fastest and Smartest Way to Pay Off My Signature Loans?

by Mack Bartlett

Almost every adult in this country has a loan, whether it is a college student with their first car and student loans, or an older couple with a couple of credit cards and a mortgage.

Keeping debt in control is an essential part of financial success. Let’s learn how to get rid of unwanted debt faster than the debt calendar has planned.

The first step is to make a list of all debt you owe. This needs to include any credit card debt, even the smallest amount, and especially the large debts, such as first and second mortgage loans. Don’t forget monthly payments that are through your local furniture shop or similar situations.

Now that you have your debts listed, you will need to put them in the order you will pay them off, which is also the order of the highest interest rate coming first.

It’s true that you are going to focus on paying off this debt first, but that doesn’t mean that we can forget the other debts. You wouldn’t stop making your house payments to pay off that $10,000 car loan debt with a 11% interest rate because you would lose your house.

You must commit to making at least the minimum payments on all of your debts. On top of that you must pay extra towards that debt on the top of your list, whether the amount be large or small.

As you pay off the first debt, you can move onto the second, paying as much as you can. This method sounds easy until you give it a shot. It’s going to take a lot of persistence in order to pay all of your debt off, but don’t give up.

If you are having a hard time following this plan, you might consider changing your list to put your smallest debt amounts first, instead of by interest rate. Once you pay off your smallest amount of debt, you will have the sense of accomplishment it takes to conquer all of your debt.

Because each person’s financial situation is different, you might only have a mortgage loan as your debt. If you want to pay your loan off sooner than your lender has planned, you will need to pay extra towards the principal of the loan.

If you are having trouble finding that extra cash you want to put towards the principal, you might consider looking at your budget. Look for places you could cut back in and even some you could eliminate, such as eating out less or quitting your gym membership during the summer months. If you receive a holiday bonus or a tax rebate, you could also use that cash to pay off outstanding loans.

Always remember if you can pay off a loan earlier than planned, you will save money by not paying as much interest as the loan calendar had planned. Try to keep your loans limited to those things that increase in value such as your education and your home or business.