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Pay off your debt: Why and how to do it

Everyone wishes to be financially stable. But, as long as you have debt, you are far from reaching that goal! To be financially secure, you have to pay all your debts. Here are the five ways on how you can be debt free:

1. List all your debts including the amount and the interest. Write all your debts on a piece of paper, use Microsoft Excel or create tables using Microsoft Word to track your debts.

2. Pay the smallest and insignificant debts. If you have debts with values that are not so important, pay it first to get done with it and to shorten your list.

3. Create a strategy or a system. Since you are finished paying for your trivial debts, you are left with your big and important debts. From your salary, determine how much money you can save and use to pay off your debt. Set that amount of money every month to pay your debt without failing.

4. Pay first the debts with the highest interest. In your shortened list, identify the debt with the highest interest. Start paying this first so that the interest will not accummulate.

5. Use your bonus to pay off your debt. If you have the money now, do not wait for another month to pay your debt. If you have bonus, it is better to use this to pay off your debt than to spend it for vacation or to purchase items that are not really important. There is nothing more impactful than paying your debts off.

The sooner that you pay your debts, the faster your way to becoming a financially secure person. When you pay off all your debts, start to avoid borrowing money. Live within your means, and if you want to buy or acquire something, save for it!