Getting rid of high debt takes hard work and willpower, but it’s doable. Here are six steps to help you start crushing debt today.
Step 1: Choose your debt-crushing method
There are two approaches toward getting rid of debt:
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 actual savings to the borrower money in overall interest paid. Choose whichever method appeals to you more.
Step 2: Maximize your payments
Credit card companies are out to make money, and they do this by making it easy to pay just the minimum payment each month. Beat them at their game by maximizing your monthly payments. Free up some cash each month by trimming your spending in one budget category or consider freelancing for hire 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 Ideal CU 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 card having a low-interest or no-interest introductory period. Be aware, though, that you will likely get hit with high-interest rates when the introductory period ends.
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, squirreling away whatever you can in a special savings account and adding the occasional windfall to beef up your fund.
Step 5: Reframe your money mindset
What got you into this mess? Are you consistently spending above your means? Is there a way you can boost your salary or significantly cut down on expenses? Lifestyle changes won’t be easy, but living debt-free makes it all worthwhile.
Step 6: 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 will also force you to be a more mindful spender.
Best of luck on your journey toward financial freedom!