As I reviewed my debt numbers recently, something stuck out to me. That is, the majority of my debt is now in the form of fixed-rate loans.
The two biggest fixed-rate loans I have are through Honda Financial Services (for my van) and Prosper (a consolidation loan).
The remaining balances have interest rates that can fluctuate, but are usually fairly stable.
Of my five balances, I like the fixed-rate loans best because every payment I make reduces the principal balance by quite a bit. This is unlike minimum payments to credit cards, which usually result in very little principal reduction.
In the past, paying down debt required a lot of conscious effort. That’s because most of what I owed was owed to credit card companies. To make any real progress, I had to pay far more than the minimum payment — usually at least double.
All that has changed. Now I make my monthly payments… and I see real progress. In other words, I don’t feel like I’m having to work as hard to get ahead. It’s just happening naturally.
Of coures, I’ll still need to make “over and above” payments if I want to be debt-free as soon as possible. But at least I’m making progress even during months when I’m not able to make an “over and above” payment.
Two insights:
1. If you can, consolidate some of your debt into fixed-rate, fixed-payment loans. Chances are you’ll see your debt evaporate more quickly and with less effort.
2. It’s always harder when you first commit to paying down debt. But the longer you stay committed, the easier it becomes. Your balances get smaller and smaller and your monthly cash flow gets larger and larger.
You can do this!
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There are various financial services in the market that offer credit card debt management for people who are not able to manage their multiple credit card debts. Hopefully people can find the help they need to eliminate debt. Thanks for the info!
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