Getting rid of large amounts of debt takes hard work and willpower, but it’s doable. Here are five steps to help you start crushing debt today.
Step 1: Choose your method
There are two approaches toward getting rid of debt:
- The snowball method involves paying off your debt with the smallest balance first and then moving up to the next-smallest, until all debts have been paid off.
- The avalanche method involves getting rid of the debt with the highest interest rate first and then moving on to the debt with the second-highest rate until all debts are paid off.
Each method has its advantages, with the snowball method placing a heavier emphasis on achieving results at a faster pace, and the avalanche method focusing more on saving the borrower money in overall interest paid. Choose whichever method appeals to you more.
Step 2: Maximize your payments
Free up cash each month by trimming your spending in one budget category and channel those funds toward the first debt on your list. Don’t forget to continue making minimum payments toward your other debts each month.
Step 3: Consider a debt consolidation loan
A personal loan from TruMark Financial can provide you with the funds you need to pay off your credit card bills and leave you with a single, low-interest payment to make each month. Or, you can transfer your credit card balances to a single, low-interest card.
Step 4: Build an emergency fund
As you work toward pulling yourself out of debt, it’s important to take preventative measures to ensure it won’t happen again. You can do this by building an emergency fund. Start small, putting aside whatever you can in a special savings account each month, and adding the occasional windfall, like a work bonus or tax return.
Step 5: Put away the plastic
Credit cards are an important component of financial health, but when you’re working to free yourself from debt, it’s best to keep your cards out of sight and out of mind. Learning to pay your way with cash and debit cards also will force you to be a more mindful spender.
TruMark Financial is here to help members reach their financial well-being. Should you need assistance, contact us today!