If you have outstanding balances on two or more credit cards, use the rollover formula to pay them off:
- Make a larger payment on the card with the highest interest rate and pay the minimum on the rest.
- Once this card is paid off, apply the amount of its payment to the minimum amount you were paying on the card with the second highest interest rate.
- When the second card is paid off, add that amount to the payment of the third card, etc. until you have paid off all of your credit cards.
Most loan payments are calculated using compounding interest, which is the interest that is added to the principal of the loan each month that the balance is outstanding, causing you to pay interest on interest. Although it’s designed to work against you, it is possible to pay off the loan 3-4 times faster with minimal additional cost to you, jut by knowing your “magic number”. Your “magic number” is the portion of your monthly payment that goes to pay the principal. To pay your loan off quickly, double, triple or quadruple your principal, or “magic number” each month.
Tips to Help You Stick to Your Budget
- Set 90-day goals.
- Track daily and weekly expenses to know where your money is going.
- Ask for help. Enlist a friend or loved one to help you remain accountable to your budget.
- Focus on the win! Imagine how you’ll feel when you’ve paid off your debt and have achieved financial freedom.
- Use a small portion of the surplus to reward yourself.