An important part of money management is clearing off ones debt. Clearing the debt makes available more resources for other major or unexpected expenses, besides improving your credit score. However if you have to repay two or three big loans, it can seem a daunting and tough task. By discipline and planning you can still get yourself out of the money hole. In such situations it will help to aggressively pay down debt by making an extra payment at least on one of your loans each month.



Now, there are two rules to follow when you apply this technique of money management. The first is to pay all your minimum balances without fail and second is to curtail spending, especially by credit cards. If you follow these two tips you can be sure everything else will fall in place as you work your way out of debt.

For planning the debt repayment schedule you need to put all your loans in a particular order and make a priority list for repayment, and pay off the debts as they appear on your list. There are two kinds of lists that you can make: the first list will order your loans from lowest to highest balance. In this list the loan with the lowest balance will be first on the list and hence the first loan to be paid off. The second type of list will be where you will put the loans in order of the interest rate that you are paying on each one of them, here though the balance is not taken into consideration. From the two types of lists you must pick one and then stick to it.

After you have the list, determine how much extra money you can devote to loan payments each month. This extra is on top of all of your minimum balances. You take this extra amount of money and put it toward the first loan on your list. This means that if your minimum on that loan is $15, and you have determined that you can pay an extra $20 each month, you will pay a total of $35 toward the first loan on your list. Keep paying the minimum balance on all of your other loans.

When you pay off the first loan, move on to the second loan on the list. But this time put all of the money you put toward the paid off loan toward the second loan. So if you have a $10 minimum on the second, you add the whole $35 from the first loan for $45. You can see how as you pay off loans it goes faster and faster. But you never increase the amount of money you pay each month. Unless, of course, you can afford to up the extra amount you pay.