If you've ever tried to pay off multiple debs simultaneously, you may have realized that sending slightly more than the minimum payment amounts each month is an exercise in futility. As the months go by, the balances seem to decrease at a snail's pace. Fortunately, there is an easier and much more efficient way to get out of debt; it's called Accelerated Debt Payoff.
Accelerated Debt Payoff, also known as Debt Stacking, is a time tested method of rapidly paying down multiple debts. You will pay far less interest with debt stacking, and will pay off the balances much more quickly. Debt stacking is incredibly simple; if you know the interest rates you are paying on your current debts, you can begin using it immediately.
After you have a clear picture of the number of credit accounts you have open and the total monthly amount of your payments, the next step is to rank your debts by interest rate from highest to lowest. Each month you will pay only the minimum amount for all debts except the one with the highest interest rate. To this account, you will apply the difference between your normal monthly payment and the money you have applied to the other accounts. For example, say you have 8 open accounts, and you have been paying an average of $600 every month towards the debts. If the total of the minimum monthly payments toward the seven lower interest rate accounts amounts to $200 per month, you would pay $400 toward the account with the highest rate of interest.
Once your most expensive debt is paid off, it's time to focus your attention on the second highest interest rate account. You will pay the minimums on the lower interest loans, and apply whatever remains of your $600 monthly payment to the most expensive debt, and so on. As you continue to systematically pay down the most expensive debt, the rate at which the total debt is erased is constantly accelerated. Soon, you will be pleasantly surprised to find your debt completely eliminated.
What if you have already taken out a debt consolidation loan? You can still use a slight variation of debt stacking to accelerate the repayment of your debt. If your monthly payment for the consolidated loan is $200, and you were previously paying $500 per month toward your debts, applying even a small portion of the remaining $300 toward repayment will have an amazing effect on the rate at which your debt vanishes.
Armed with this information you can eliminate debt more quickly, and your money will doing all of the work, while you reap the benefits. If you go about debt repayment without a good plan, it could take you years to become debt free if you ever do. Accelerated debt payoff is a simple and effective method that you can use to improve your financial outlook in the shortest possible amount of time.
Gregg Pennington writes articles on a number of topics including debt, credit, and online lending. For more information about debt and credit visit http://www.onlinemoneysources.net/debt-and-credit.html
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