How to Set a Plan to Pay Off Debt

Before you do anything, it’s important to know exactly what your outstanding debts are. Make a list of them, including key details like the interest rate, balances, lender and any important details like the expiration date of a promo rate. Mapping out your repayment needs will keep you organized and help you take charge of your debt.

Pick a pay-off strategy

The “avalanche” method, which prioritizes larger, higher-interest debts, is great for keeping your outstanding balance under control. The “snowball” method, which prioritizes checking smaller debts off your to-do list first, can give you a greater degree of confidence when it comes time to pay off the bigger debts. The “blizzard” method, which means alternating between “avalanche” and “snowball,” can also be really efficient. In addition, it’s important to know how much or how little you can realistically put toward any individual payments. While you consider a method, think about any debt-specific strategies that could help, like reevaluating your student loan repayment options, refinancing your mortgage, or even filing taxes separately from your spouse. Consolidating some of your credit card balances can also make debt repayment easier: You may be able to get a lower interest rate, and you’ll have fewer monthly payments to manage. Personal loans or credit card balance transfer offers (which allow you to move your outstanding credit card balance to a new card with a temporarily lower interest rate) can each be good ways to do this, too. Remember that it’s always smart to compare costs and terms.

Look to a debt-free, more secure future

While you’re paying down debt, keep your big financial picture in mind, and figure out how to avoid owing money in the future if possible. Doing something as simple as tracking your finances in a paper planner can help you visualize and better plan your daily expenses, experts say. Have a plan for any raises or windfalls that come your way, too, so you don’t fall prey to lifestyle creep. And balance debt repayment with saving and investing. Doing both at once means you can deal with unexpected expenses without taking on additional unexpected debt while you set yourself up for a financially secure future

By Ben Jay

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