Pay Off Debts Faster: Debt Stacking – Part 1 of 3

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Do you find yourself in a mountain of debt? Are you looking for a way to pay off debts faster for no extra cost? If you answered yes to both of these questions then debt stacking might be the answer for you. Debt stacking is just a technique; it is not a debt consolidation program or consulting service. Have you ever heard the saying “the genius is in its simplicity?” Well, debt stacking would fall into this saying. It is a concept, or a technique, that is both simple but very effective in removing debt faster. If you have multiple debts, then I would recommend debt stacking as a solution for you.

Here is a step-by-step guide on how debt stacking works to pay off debts faster:

Step 1:

Stop creating new debts. No debt program is going to work if you can’t stop creating new debt. Learn to manage your cash flow. If you are not sure if you are spending more than you make you can get a free budget spreadsheet program I created here.

Step 2:

Make a list of all the debts you have. Remember, a debt is something that can be paid off in the future. Do not include things like, utility bills, rent etc.

Step 3:

Arrange the list from lowest balance to highest balance. A lot of people think it is wise to pay off the highest interest debts first. While this is not a bad thing, it is more effective to pay off the lowest balance first. One reason is because people are more likely to stay on track if they see results early. You gain momentum when you see balances of zero.

Step 4:

Determine how long it will take to pay off each debt. The best way would be to find a financial calculator and plug in your numbers. I have provided one in my tool kit, which you can find here. You can also find loads of free calculators on the Internet.

Step 5:

Add into the list the details for each debt. This includes: minimum monthly payment, your actual monthly payment, interest rate and the year each debt will be paid off.

Starting with a list is the most important part. It is key if you want to pay off debts faster. If you take the time to organize the debts you have, then you will be far ahead of most people. In the second part of this post I will cover exactly what to do with the list and how you can use debt stacking to get out of debt sooner and save thousands in interest.

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