New Year – New Plan
The holidays are over and like many parents, you may be wondering how you’ll tackle debt you may have racked up to pay for the celebration. There has to be a good way to tackle this debt, right? Maybe make the minimum payments and try to pay them off with your tax return? Divide the balance by 10 plus interest to try get you to next year? There are lots of ways to tackle the debt, but there are a few tried-and-true methods that seem to work best for most families.
1. Small Successes
Pay off your smallest balance debt first. Decide how much extra you want to devote to paying debt down quicker and then apply that to your smallest debt. To get started, write down all of your loans, credit cards, etc. and the current balance listed largest to smallest. This method really seems to find success for most people by giving them the motivation to pay off more and more debt. It’s an emotional approach that works by creating a sense of pride when you see the zero balance, inspiring you to put more into the next one to get that paid down.
2. The Numbers Game
Pay on your highest interest debts first. If you have different loans or credit cards with significantly varied interest rates, pay more on those high-interest rates (typically store cards) to get those paid off fastest. The high-rate loans and cards accrue the most interest, so paying the most on these get you the biggest bang-for-your-buck.
3. Take Advantage of Promotions
Many banks offer special limited time promotions such as balance transfer offers or promotional periods of lower interest rates. Take a look at what offers are available in the market place and consider re-financing or transferring balances to get a lower rate.
Paying off debt takes discipline and motivation, but the feeling of seeing zero balances makes it worth the effort. Get started today and see what you can accomplish. We can’t wait to hear how you did!