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How to Conquer Debt

Posted on Apr 3, 2020 in Personal Finance

how-to-conquer-debt

Important part of any financial planning is paying off your debts. Regardless of how hard you work or how much you earn, Interest on your debt will eat away most of it.

Compound interest works wonders if you invest but can be devastating when you borrow. Conquering debt starts with simple step. Spend less than you earn and use the remaining to pay back debt. If you have multiple debts there are two ways to conquer debt, You can choose one of it based on what makes you comfortable and motivated.

FIRST METHOD IS #DEBT_AVALANCHE

In this method, You payback Debt with highest interest first. It is an efficient way and reduces total amount of interest you pay in long run. This is best plan if you are committed and self motivating. However it can be less motivating, as it might not you sense of achievement as debt with highest interest might be bigger and takes longer to payback.

SECOND METHOD IS #DEBT_SNOWBALL

In this method, You payback Debt with smallest amount first. It might make you pay more interest but will give you sense of achievement on each debt you close and motivate you to save more to close even more debts.