Best method to eliminate debt

#NaymarChallenge and you personal finances: debt.

You’ve probably seen Brazil’s star player fake a trip during their match versus Mexico. Credit:乖乖乖

After rolling around for what seemed like an eternity and drawing the Mexican’s ire, Naymar would soon become a meme where thousands across the world are using him to make a point!

Naymar and Personal Finances

What did you think of his theatrics?  As he rolled and rolled this got my creative juices flowing!  Let’s apply the #NaymarChallenge to eliminate debt.

You ready?! Let’s go!

First, list all your debt from smallest to largest.   The interest rate does not matter unless two payoffs are similar then you can list the highest percentage to lowest.  You also include the payoff, minimum payment, new payment.

The goal is to work on the first debt while making the minimum payments on the debts listed.  While working on the first listed debt Naymar (roll) additional money into this debt.  You should be making the minimum plus the additional money on the debt being worked on.   In the example below, Card1 payoff is $150 with a minimum payment of $25.  An additional money, $125, is combined with the minimum making the New Payment $150.

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There are different means to get additional money.  Look around your home and sell those old electronics you no longer need.  Look at taking an additional shift or asking for overtime.  Get creative here!

As soon as the listed debt is eliminated, the minimum payment from this debt is combined with the minimum payment for debt immediately below.  Now the amount being paid towards the debt has grown.  No longer is the minimum payment being applied.  Notice how Card2 has a New Payment amount, $45.  This was the minimum from Card1 plus the minimum from Card2.  There is  no additional money on this payment.

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Follow this pattern until all the listed debts are paid.  Remember any time you payoff the debt that minimum payment needs to be applied to the next debt.   The temptation will be to use that new found money to purchase something new. Don’t!  Naymar your debts as quickly as possible.  Don’t keep your debt lingering around.  Go ahead and kick them out.