Keeping personal debt under control is an important part of achieving financial goals, like having a comfortable retirement. More debt means more of your money goes toward paying interest instead of going into your savings account. <\/p>\n\n\n\n
To help you better manage debt, financial experts like David Almonte, CPA, member of the AICPA\u2019s National CPA Financial Literacy Commission and CGMA from Providence, Rhode Island, recommends three areas to consider when paying down debt.<\/p>\n\n\n\n
1. Take Inventory of Your Debt<\/strong><\/p>\n\n\n\n \u201cThe first step to managing and paying down debt is to take an inventory of all debt currently owed,\u201d Almonte says. \u201cTaking an inventory of all debt will help you see the big picture and decide where you should start attacking your debt.\u201d<\/p>\n\n\n\n As soon as you launch it, the debt reduction tool in Quicken Deluxe<\/a> prompts you to enter the debts you want to pay off. Credit card debts are added automatically, but you can enter as many other debts as you need, like student and auto loans.<\/p>\n\n\n\n 2. Prioritize Your Debts<\/strong><\/p>\n\n\n\n After you have added your debts into Quicken Deluxe<\/a>\u2019s debt reduction tool, it prompts you to verify the interest rate and minimum payment required for each loan. If Quicken doesn\u2019t show the interest rate, you can enter it yourself from your last monthly statement.<\/p>\n\n\n\n \u201cConsider paying down the debt with the highest interest rate first,\u201d Almonte recommends. Take a look at your highest interest rate debts, like your credit card, and move the slider for each one to see how increasing your payments will eliminate the debt sooner. As you adjust the planned payment, Quicken Deluxe<\/a> automatically shows you how much money you will save in interest.<\/p>\n\n\n\n 3. Select a Strategy to Pay Off Debt<\/strong><\/p>\n\n\n\n In most cases, it makes sense to pay off the debts with the highest interest first. However, another option is to concentrate on your smallest debt. Almonte explains that this often helps you get motivated and builds momentum for your debt elimination plan.<\/p>\n\n\n\n \u201cSometimes,\u201d Almonte adds, \u201cit is not worth paying off a debt early and giving up cash on-hand if the interest saved is minimal.\u201d This may be something to consider if you don\u2019t yet have sufficient savings to serve as an emergency fund, or if the tax break on a retirement plan would be more than what you pay for loan interest.<\/p>\n\n\n\n Keep At It<\/strong><\/p>\n\n\n\n Unless you win the lottery, debt elimination is probably going to take time, so monitoring your plan on a monthly basis is vital. Consider using the budget tools found in Quicken Deluxe<\/a> to see where you can save in household expenses to help pay off your debts even more quickly.<\/p>\n\n\n\n