If recent weeks have shown us anything, it’s that Americans, American small businesses, and even large corporations all have more debt and fewer savings than they need in a crisis. And though this is to be expected, recent events have made many people want to focus more on smashing their debt and building their savings accounts for future needs and to create a stronger safety net.
Paying down debt and saving more is difficult – if it wasn’t, everyone would already have a nice nest egg in their bank accounts. That is why VIP Title Loans wanted to lay out a great plan for how to pay down your debt, so you can save more instead.
One of the main reasons many people cannot save as much as they would like is because they have credit card debt or other debt that they have to pay first, instead of saving. But don’t worry, there are things you can do and simple steps you can take to get out of debt faster (and then start saving more).
So, even if you need a car title loan from VIP Title Loans, implement some of these tactics to snowball your debt, pay it down faster, and start saving!
Pay At Least The Minimum – Every Time
This first tip even before you begin snowballing your debt isn’t easy, but it is necessary.
If possible you should try and never only pay the minimum on your credit card or other debts because the minimum payment might technically count as a payment and help you avoid missed-payment fees, but it isn’t really paying down your balance – usually just paying the interest.
The minimum is so low, you end up paying even more in interest throughout your loan than what you originally owed. In fact, depending on your APR and debt amount, you could be charged more interest every month than you’re even paying off, making your balance go up every month!
However, if you cannot afford to pay more than the minimum, then consider a title loan to get you that jump-start, and then start snowballing your debt – here’s how!
Use the David Ramsey Method & Snowball Your Debt
This is a great method that works for anyone with multiple debts. And the best part? It’s simple!
First, make a list of all of your debts (car, a title loan, payday loans, credit cards, etc). Then, arrange this list from the smallest debt to the largest. Third, start paying the smallest debt down first, while paying the minimum amount on the others so you don’t get hit with non-payment fees.
Now here is where the magic happens, as soon you pay off that smallest debt (hopefully quite quickly, within just a few payments), then you add that amount to the payment you were using for your second smallest debt.
And once you pay off the second-smallest debt, move on to the next smallest, adding the money you were using from the first and second to the minimum you are paying on your third.
The last step? Repeat, repeat, repeat until all of your debt is paid off.
If a visual representation is easier, here is an example:
Car Loan: $900
Credit Card #1: $1,800
Credit Card #2: $2,700
Other Debt: $3,000
Let’s say these are your 4 debts, arranged from smallest to largest, let’s say the minimums are $100 each, meaning you are paying $400 a month on these debts. In 9 months (or less, if you can), your car loan will be paid off. This means you will then pay $200 on your first credit card debt (adding the $100 from your car loan to the minimum you’ve been paying for your first credit card). This debt will already be down to $900, so in just 4.5 months, it will be paid off. Then you will add that $200 to the $100 minimum you were paying for your second credit card, making that $300 a month, which will pay that one off in just 3 more months. Then you will have $400 to use for your other debt.
The debt snowball method works because you get little wins every time you pay off one of your debts while adding the money you were using for the previous debts to the next biggest one. So, you feel accomplished all the while paying off debt and not incurring any extra fees.
Need Cash to Start Your Debt Snowballing? Get a 6% APR Title Loan from VIP Title Loans & Get Out of Debt Faster!
We wish the above tactics worked every time for every person – but we know that everyone’s situation is different, and sometimes you need a quick influx of cash to get back on your feet or begin to make the minimum payments. That’s what VIP Title Loans is for!
Contact us today to learn more, fill out a no-obligation form to start the process, or find the closest location to you. VIP Title Loans is here to help you get out of debt faster!
We’re all in this together – let us help!