Debt Deliberation: How To Decipher Debt In Way That Makes Sense

Debt is a lot like exercise: most of what you hear is misleading, while a small, marginal amount of advice is worth paying attention to when someone is speaking.

When it comes to debt, theories abound as far as what you should be doing, from how you’re paying off certain accounts, how to maximize your efforts or exactly how to prioritize your debt in a way that makes the most sense over a certain time frame (most have a 3 to 5 year plan to eliminate debt altogether).

Debt, much like the parallel of losing weight, can feel as though you’re trying hard and nothing is happening. Your credit card and loan balances barely move, despite all the best intentions in the world to stay the course and watch your debt disappear (at least that’s your plan).

But paying off debt sometimes takes on a life of its own, especially if you have multiple accounts or lines of credit. Some aren’t quite sure how to divide and conquer accordingly, and thus a free for all begins as you try to manage your debt and see very little in the way of results.

Again, imagine a workout that consists of you walking around the gym and not sure how or why to use certain pieces of equipment based on your goals. Debt can be just as maddening or worse.

The general rule of thumb with debt is to focus on the accounts that have the least amount of debt and put as much money or resources as you can toward it. Once that is paid off, you should take that total amount you’ve already allotted and put it toward your next highest amount and that, along with what you were paying on it before, starts to put a dent into that account now, too.

The process continues until all debt is paid off in full. The key is to take as much and put toward lowest amount, while still maintaining the minimum payments on the other ones as well. You can’t simply forget about your other lines of debt or ever pay them late. That is going to affect your standing as far as credit score goes negatively and how lenders perceive you as a liability or a strong investment when they loan you money.

Deciphering debt doesn’t have to be one bad piece of advice after another or that feeling as though, much like your cardio and sit-ups, you’re totally out of your element and just want to curl up and forget the entire idea of debt.

Doing that is only going to lead to a lot of hard work and sweat, with nothing truly to show for it.

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