Is your debt piling up, and there’s seemingly no end in sight? You’re not alone. Millions of people in the US are suffering from a large debt load. If you don’t know where to start, there is hope, and financial whiz Dave Ramsey may have the solution. Check out these strategies and see how they can help you get out of debt.
Understanding the Debt Avalanche Method
The goal with any financial advice is to get your debt paid off completely, and that can be daunting. Dave Ramsey recommends trying one of two strategies. The first is the avalanche method.
It’s pretty straightforward: tackle the biggest debt first, especially the credit card with the highest interest rate. Even if you have one credit card with a bigger balance and a lower rate, you’ll want to make minimum payments on that card and the remaining cards for now. Once you’ve tackled the highest-interest card, move to the one with the next highest interest. The goal is to reduce what you’re paying in interest first, so you won’t be caught in the vicious cycle of making high payments forever.
Using the Debt Snowball Method
The debt snowball method works the opposite way. Make a list of all your credit card debt. From there, tackle the smallest loan amounts first. This gives you a sense of accomplishment and can motivate you to tackle the next lowest balance. Even paying off one credit card can bring the light at the end of the tunnel closer into view.
Which One Is Right for You?
It’s up to you to decide which debt-free plan will work for your household. Do you feel encouraged as soon as you pay off a credit card? If so, the snowball method might be the best bet. If you just want to chisel away at high-interest debt and go for it, try the avalanche method. Both are effective in paying down balances you owe.
Additional Help With Paying Down Debt
Choosing any plan to pay down debt means you’ll still need to incorporate some positive financial choices along the way. These tips can get you there quicker:
- Don’t accumulate more debt. This can cause your original budget plan to go haywire.
- Take on a side gig to make more money.
- Avoid filing for bankruptcy.
- Consider consolidating your cards if debts are overwhelming.
- Build up a savings account and an emergency fund.
- Pay off high-interest balances when you have an influx of cash.
While you chisel away at your debt, don’t lose track of making on-time mortgage and vehicle payments. Late payments of any kind will affect your credit score.
Regardless of which method you choose, it’s important to pick a goal and stick to it. Debt can be overwhelming, but with the right tools, you can get the upper hand. Try these expert tips and start working today toward a debt-free new you.
~Here’s to Your Success!
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