Debt is a way of life. Everyone has it and uses it. However what everyone should strive for is to bring their debt free day forward.

Let me explain. Your debt free day is the day when all debts are settled and you are free of the shackles of debt. Everyone has one be it your retirement day or the day you die. The trick is to bring this day forward and settle all your debts early.

Think about it, how much better it would be to have 100% spendable income each and every payday

Lets first of all cover the types of debt most people have:-

Mortgages

HP Loans

Credit Cards

Store Cards.

Mortgages are by far probably the largest debt most individuals will ever have. Used to purchase your home is the reason why this will be the biggest commitment we take on. Although this debt is backed by the security of an asset, if you ever consider working out just how much you will end up paying over the term of the mortgage, I think you will be in for a big shock.

HP Loans are usually taken out to make those purchases that are just beyond our reach in terms of the amount of money we have available in the short term. The purchase of cars or furniture for instance. Taken over a shorter term than mortgages but have a higher interest rate payable.

Credit Cards give instant access to relatively small amounts of credit and apart from the minimum monthly payment they have no set term or repayment amount.

Store Cards as above, typically used to make purchases in a specific store and are more expensive than credit cards.

This is not rocket science, we all accept that some debt is necessary, the trick is to repay it as quickly as possible and ultimately pay less in interest.

Therefore, to become debt free the trick is to pay the debt with the highest interest rate first. Simply pay the minimum on all your other debts and pay as much off on those that charge more, typically store cards first then credit cards.

With reference to your mortgage there are typically two ways to pay this off quicker. Firstly, you could set up a standing order that pays 13 payments per year. This way you make an extra payment than normal which will go towards capital and will, therefore, reduce the capital amount and ultimately the interest charged.

Not all lenders, however, allow you to do this.

Secondly, with the onset off more flexible lending terms by nearly all institutions you could merely make a one off payment as and when you can afford it which will have the same effect as above.

You will be pleasantly surprised the overall affect these simple steps have on the overall cost of your home.

There in a nutshell that’s all there is to becoming debt free.