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Whether it's student loans, credit cards or any other form of debt, an early repayment is ideal for many reasons – and a worthy goal to achieve.
Data from the Federal Reserve indicate that about 44 million Americans hold $ 1.5 trillion in student loan debt, and that US households owe $ 870 billion in credit card debt . In total, we owe $ 13.5 trillion. These staggering numbers show just how ubiquitous debt is in America today.
I have personally earned $ 40,000 in student loans during my graduate studies and have worked hard to repay them two years after graduation using some of the strategies outlined here. If you would like additional help to prioritize and automate the repayment of your debts, visit the websites below to ensure you get the best return on your money.
Make a complete inventory of your debt
Before you can set up a debt repayment plan, you need to know how much you owe, to whom you owe, your interest rates and your monthly minimum payments. There are some great tools that connect to all your financial accounts and help you manage the repayment of your debts. Here are some things to consider to get started:
mint – Mint is the most popular free online money management tool. Connect it to every bank, credit card, loan and investment account you have to display all your balances on one dashboard. It downloads the details of your transactions in one place and has a feature to set payment goals for each debt account.
Karma Credit – If you have a lot of different credit cards or student loans, you might forget something when you connect your accounts to the Mint. Credit Karma gives you access to your TransUnion and Equifax credit reports with a complete listing of your outstanding debts and balances, as well as a free overview of your credit score.
AnnualCreditReport.com – The law obliges the three major credit bureaus to give you each year a free copy of your credit report. This website hosts the government mandated program. I visit and enter a credit report every four months, so I never have to spend a full year without verification, which allows me to keep an eye on my debts.
Prioritize your payments
There are different philosophies on ordering, you should pay your debts. Some people say you should pay them back from the smallest to the biggest balance (snowball of debt). As a holder of two degrees in finance, I am in favor of paying them from the highest interest rate to the lowest (avalanche of debt). This is mathematically the fastest way to pay off your debts and allows you to save as much money as possible.
In either case, you must make at least the minimum payment on each outstanding debt each month. Put the maximum possible payment in a debt until it is paid, then go on to the next debt. These tools can help you set priorities:
Unbury.me or Unbury.us – These free loan calculators are popular in the Reddit community and in other online finance centers. Whether you want a snowball of debt, an avalanche of debt or a different payment preference, it details the dollars and cents of each strategy.
You can also use Currency and Karma Credit to view certain details of the debt and the account. That's why they are important in the first step.
Put it on the autopilot
Now that you know what debts you want to pay in what order, it's time to pay for everything on your own. You can do this for free with the help of your online credit card payment function, student loan or online bill. There are other tools that can help you if you are willing to pay modest fees each month.
tally – Tally is a debt management app that also gives you a line of credit to save money on interest in some cases. It has an integrated advisor who does the math of an avalanche of debt and a debt snowball gain, and helps you pay off all your debts with a monthly payment, between other features. The Tally app does not incur any fees, but some costs are related to the line of credit and you need a credit score of around 660 or more to qualify.
Amended – ChangEd rounds up your purchases with a linked credit or debit card to repay your loans. This app is focused on student debt and bills $ 1 a month.
You do not have to live with a debt forever
Debt can seem overwhelming and millions of people are slow to buy a house, to have children and other important events in their lives, thanks to their large monthly payments. No matter what type of debt you have, these tools will not fail to help you pay for them.
Do you plan to refinance your loans? Consider one of these options at our partners:
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