Getting into debt takes almost no time at all, but getting out of debt normally takes years. The idea of “buy now, pay later” can be very appealing, and we can easily find ourselves drowning in debt faster than you can say “I’m in over my head.”

The first step towards getting out of debt as soon as possible is to stop using credit cards and use only cash to pay for your purchases.

Don’t take out any more loans, and cut up your credit cards so they can’t be used. By doing this, you will pay off all your debt after awhile, as long as you are making your monthly payments.

However, depending on the amount of debt you’ve incurred, it could take years to completely get out of debt this way, not to mention cost you hundreds (or thousands) of dollars in interest.

But there is good news… there are lots of easy ways to pay off your debts faster and become debt free much sooner.

First, make a list of all your debts. This includes any loans, credit cards, financed items such as your car, appliances or furniture, and of course, your mortgage.

For each debt on your list, be sure to include:

1. The amount you’re required to pay each month.

2. The total balance left on the debt.

3. How many months remain on the loan?

4. The interest rate

If you add up the amount that remains on each one of your debts, you will see how much you owe to all your creditors. (And you may be shocked!)

Now add up all the monthly payments so you can see the total you are required to pay every month.

At this point you’re ready to start figuring out the fastest way to get out of debt.

There are several ways you can pay off your debts quickly. Some will be better suited to you than others, depending on the type of debt you have.

Pay Off High Interest Loans and Credit Cards First

Most creditors charge you interest each month on the amount of debt remaining, so the more you owe, the more interest you pay.

But by paying larger amounts towards your credit card bills than the minimum monthly payments, the amount you are required to pay each month will decrease. The more you pay off, the less interest you will pay every month.

And by paying off the credit card or loan with the highest interest rate early, you will save the most money on a monthly basis.

When you have that one paid off, do the same thing with the debt that has the next highest interest rate, paying it off early in this manner as well.

Some creditors may charge the entire amount of interest on the full amount you borrowed spread out over the time period of the loan. If you pay off this type of loan early, you will still pay the same amount as if you pay the loan every month.

If you have a loan like this, it’s probably best not paying it off early. Instead, focus on paying off your other credit cards or loans that will decrease the amount of interest you pay.

Mortgages usually have the lowest interest rate of all your loans or credit cards, so you should make this the last on your list of early payoffs.

Pay Off The Smallest Loan First

Take a look at all of your debts and start paying extra each month on the smallest one. This one will be paid off the fastest.

Once you pay this off, take the cash you were paying on that loan and use it towards paying off the next smallest loan.

Eventually you will end up with only your mortgage left, and if you use all the money you had been paying towards your other debts, then this will also be paid off much faster.

Pay Off The Biggest Loan First

In order to reduce the amount of time and money to pay off a loan, pay off the debt with the largest payment every month. Once you pay off this debt, you’ll see your monthly payments drop dramatically.

You can also do this by paying off the debt that has the least number of months remaining on the life of the loan, as this will reduce the monthly payments quicker.

As you can see, paying off even just one of your debts will leave you with more money every month and will help to control your finances better.

Eliminating the loan that has the highest monthly payment will have the biggest effect on your bank balance every month.

And eliminating the loan that has the least number of monthly payments remaining will have the fastest effect on your monthly bank balance.

No matter which method you use to get out of debt, the important thing is to use the money you save once you have paid off a loan to pay off your other loans faster.

To get out of debt for good, don’t get “comfortable” with the amount of debt you have left after paying off one or two loans, nor increase your indebtedness again by freely making purchases on your credit cards.

Author Bio: Click here to find out more about debt solutions. MartiJo Grayson is a freelance writer who enjoys helping people get out of debt through her writings.

Category: Finances
Keywords: get out of debt, how to get out of debt, get out of credit card debt, eliminate debt