Unique way to reduce the debts faster

This is another way on how you can reduce your debts faster. This is a little bit different than the consolidation of debts in my earlier post. This method is also known as snowball debt reduction.
THis is how it works. If every month you have an allocation of RM1,500 per month just to pay debts from different channel, you will need to maintain this allocation everr month until all your debts are paid.

For example:
Car loan - RM500 per month (still have 3 months to pay)
Personal Loan - RM800 per month (still have 6 months to pay)
Education Loan -RM200 per month (still have 2 years to pay).

This is how the payment looks like
Jan - car (500), Personal Loan (800), Education Loan (200)
Feb - car (500), Personal Loan (800), Education Loan (200)
Mar - car (500), Personal Loan (800), Education Loan (200) -- by this month you should have finisehd paying your car loan. Use the 500 to top up the personal loan payment
Apr - Personal Loan (500+800), Education Loan (200)
May - Personal Loan (500+800), Education Loan (200)
Jun - Personal Loan (500+800), Education Loan (200)
Jul - Personal Loan (100+800), Education Loan (400+200)
Aug - Education Loan (400+200)

As you can see the original duration is 2 years but with this snowball, you can finish paying all your debt in 8 months. It is a very effective way on how to manage your debt. Give it a try and you will be amazed on how effective it is.