Consumer debt can be one of the biggest challenges to financial wellness. With some intentional action and commitment, reaching true financial wellness is possible.
Here’s how to pay down your debt in five simple steps.
- Organize your debt – List every credit card you own along with an outstanding balance. Jot down the amount owed to each card issuer. Next, list the interest rate of each card. Repeat these steps for other loans you may have as well.
- Choose your debt-crushing method – There are two approaches generally advised to folks who are seeking to get rid of their debt. Choose the method that makes the most sense for your personal and financial circumstances.
- The snowball method involves paying off your smallest debt first, and then moving to the next-smallest until all debts have been fully paid.
- The avalanche method involves getting rid of the debt that has the highest interest rate first before moving on to the debt with the next-highest rate until all debts are paid.
- Maximize your payments – Once you’ve chosen your debt-crushing method, find ways to maximize your monthly payments. You can do this by trimming spending in one budget category and channeling that money toward debt. You also can find ways to get extra cash, such as freelancing for hire.
- Consider a debt consolidation loan – When you consolidate debts to one low-interest loan, it’s a lot easier to manage the monthly payments. Plus, the savings in interest you won’t pay can be significant, especially if the new loan has a low interest rate. If this approach sounds right for you, consider taking out a personal loan from TruMark Financial.
- Negotiate with your creditors – Many credit card companies will be willing to lower your interest rate once you prove you are serious about paying down debt. After kicking off your debt payment plan, it’s worthwhile to contact each credit card company to discuss options.
No matter which strategy you go with commit to not adding more debt onto your card while paying it down. Paying off a large amount of debt will take time and willpower, but living debt-free is key to financial wellness. Best of luck on your debt-crushing journey.