What Kind of Debt to Payoff First?

Paying off debt is an art. In today’s day and age, where debt has become a reality of life, it is really difficult to avoid it. The journey begins with student loans, then credit card loans, then auto loans and home loans. If you are lucky, this is where the story will end. If not, you will have to worry about personal loans and even unsecured loans.

Getting rid of the debt cycle may look like an impossible feat to achieve. However, if you follow a simple plan and stay determined on the course, you can become debt free. Learn which loans to pay off first.

Payday loans

These are very short-term loans that must be paid off as soon as you get your paycheck. As they are very risky types of credits, their rates of interest are very high as well. If you don’t pay them on time, they can keep accumulating over time and create troubles for you. To stay safe, ensure that you always get these credits from dependable sources like paydaypixie.co.uk.

Credit card loans

They are rotating debt styles. This means that they will keep accumulating over time. The good news is that you get a fresh credit limit each month. Also, to keep things going, you can pay a predetermined amount each month to keep rotating the credit. With some good planning, you will be able to get rid of this loan as well. In fact, you could remove the credit card rollovers from your life in just 3 to 4 months.

Student loan

This is the worst kind of credit but provides you several options for renegotiation as well. Before you buckle up your shoes, check if the rate of interest can be negotiated. Also see if you are eligible for some rebates, discounts etc. If there is any way in which you could lower your burden, go ahead and do it. Several fresh graduates are unable to build a great future for themselves, simply because they have to pay off for their expensive education. Don’t let yourself be one of those. Get rid of this debt.

Auto loans

A car isn’t supposed to be with you forever, but it could be useful for the next 5 years, at least. You don’t want to spend all that time paying for gas, maintenance as well as the debt. Now that all other headaches are gone, finish off this loan. Renegotiate the interest rate and ask if there is any pre-payment penalty. Weigh all your options well and make sure that you make the right choices only.

Home loan

If you are less than 30 years of age, you may not even be worried about buying a home. However, if you have a mortgage, relax and just focus on keeping your bank account funded sufficiently. These are very long term and often have the lowest rate of interest. Whenever you find an opportunity to negotiate rates, do it.

So, what are you waiting for? Write off old loans from your credit history quickly.

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Tim Spafford

Tim Spafford

Tim is a student who works hard to get a degree in finance and build a successful career in business consulting. Being a student and living in London Tim has a real-life experience in budgeting, saving, money making, traveling and having fun.
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