Paying off your debts in 123…

1. Prioritise your debt

When you have more than one debt to pay, it would be rational to pay off the debt with the highest rate of interest. Avoid paying interest on the interest you already owed because you didn’t make enough payment to reduce the balance. This is why it is important for us to pay off high interest incurring debts first. Or else, we could be paying twice the original amount. Consider what you stand to lose for non-payment. Priority debts should also be those that have bad consequences if you don’t pay. For example, you may lose your home if you default on your mortgage payments, get a bad credit score, or taken legal action against for credit card outstanding debts.

2. Pay off the lowest debt balance first

This practice is known as “snowball technique”. It is similar to rolling down a snowy hill, forming a snowball. The snowball will grow larger and faster as it rolls further down. As the amount of money you send into each payment gradually compounded, and each debt is reduced until you are sending in large amounts of cash to pay off your biggest and final debt. The snowball technique helps to repay your high-interest balances far faster than you could by just using a random payment arrangement.

3. Make micropayments to reduce debt

These payments can start off with a small amount and over time add up to big balance reductions, which saves you thousands in interest expense. Every time you gather some funds, regardless of the amount, uses it to pay off your outstanding debt payment. If you were to keep the amount, you would most probably spend it on something else. It is human nature. People often ignore the power of small amounts. Your small efforts may not look like they’re even denting your debt, but there is a compounding effect that is on work. Over the years, your debt will be eventually paid off.

4. Pay off Debts regularly

The single most important thing you can do to paying off debts is to pay your bills on time, whether it is the full amount of just part of the amount you’re paying, Paying your bills on time is absolutely critical. As missing one payment on your credit card may result in a late fee, late payments often trigger rate increases on your other credit cards. Thus set up an automatic repayment will ensure you don’t miss your payment. Whenever you receive extra funds from an overtime work schedule or claims reimbursement, increase your debt repayment amount. By doing so, you can reduce your debt faster.


To help you plan your debts repayment, check out the debt payoff calculator developed by Stress Proof Your Money, where you could create a payoff plan of your own, based on your monthly budget.

SPYM Loan (Debt Pay off) Calculator

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