How to pay off your debt faster

How to pay off your debt faster without having to make larger payments than your minimum and this takes like little to no extra effort. Method I'm going to be talking about is called micro payments. You can do this in so many different ways. You can do micro payments daily, every other day, every three days or every week. In this example I'm going to be showing you every week. This is one of my favorite ways to do micro payments but it can look different for different people. So let's talk about if we were having a $9,000 balance on a loan, on a credit card. The whole point of this is to make a payment every week. Why? This lowers the principal before your statement date, thus lowering your interest charged. Because a lot of cards and a lot of loans have daily compounding interest or weekly compounding interest. And so what this does if you make just one lump sum at your statement date every month, you're being charged the full interest amount off of a total balance of 9,000. So if we can lower that statement balance before your statement date, you're going to get charged less interest, which means the payments you are making, more of your money is going to go towards the actual balance. Like I said, this tackles that daily compounding interest that keeps a lot of us stuck in debt. The banks want us to stay in debt because that's how they make money off of us. So if we can tackle the daily compounding interest, we're going to get ourselves out of debt a lot faster. So let's talk about interest. Most credit cards have interest rates of about 25% to 28%, sometimes more, sometimes less. For this example, I'm going to go on the higher end of things and say 28%. So a 9k balance, I had to estimate this, at 28% is approximately a minimum payment of $270 a month. Let's go over how to find your weekly payment. Now this formula will work for any of your guys's balances and minimums. So you can apply the same thing, whether you have a $5,000 balance and a $150 minimum payment, you would do this same process. But for this example, we're going to be working with the 270 minimum. But the formula is you take your minimum payment, you divide it by four for how many weeks, and that is your weekly payment. So any of you can apply that to your situation. So for this, it's going to be 270 divided by 4, getting us $67.50 a week. That's what we would pay weekly for our micro payments. Now if you remember, I was just talking about the the point of this is so our interest is now charged off of a new balance. So instead of when we get to our statement date, our interest is charged off of 9,000, you will see here because we tackled this every week, we're now being charged off of a new total. So by the end of the month or end of your four weeks, you're being charged off of 8,730 because of your weekly payments. Overall in the lifetime of your loan, you'll pay less interest, which will help you to pay off that loan faster. A few things to note, so this works for a strict budget that can only pay the minimum. This is a great setup for those individuals. But if you can make larger weekly payments, let's say your minimum is 270, but you can do 300 a month in your budget towards it, then do 300 and divide that by four and make larger payments. So if you can make larger payments or even an extra payment, if you can make an extra payment of the 67.50, maybe a fifth payment that month, do that. If you can fit that in your budget, do that because that's going to lower your principal even more, which again is going to knock away at that interest charge over time and you'll pay off that debt even faster. Okay, so you don't have to stay stuck to this. If you have room in your budget to pay more, definitely do that. Lastly, I want to say you want to start your week one, you don't want to just start at the beginning of the month on any willy nilly date, okay? You want to make sure you start your week one payment the week after your statement date. This makes sure that all four of your payments are going to come through before your next statement date or before your minimum payment due. You want to make sure you get all four payments processed before your minimum payment is due, so you're not hit with any late charges and it satisfies that minimum that they are are requiring you to pay. So just be sure you hit that and you always check your statement date. You can find that on any of your loan statement, monthly statements, what your statement date is, start your week one after that. This method is so good to make sure that more of your money is actually going to the balance of your loan and not to paying the banks. This is going to help you get out of debt way faster. So if you have a balance or an amount that you want me to do for my next example, put it in the comments and I will do that for my next video.