Eliminate Debt Faster with These Proven Strategies

A debt is fine as long as it is controllable. You must be in control of your debt, whether it is small or not, and it is also necessary to strategize managing it. 

Debt is undeniably walking among all of us. It is unavoidable. 

Money can be good and bad; debt is a killer when it grows uncontrollable. 

Moreover, there are several reasons why people fall into debt: poor money management, wants over needs, and even unforeseen expenses. 

If you have it out of control, it will wreak havoc and destroy everything in your financial path, leading to an unsecured future. That is the last thing that anyone would want. 

Moreover, in a recent report by the Federal Reserve Bank of New York, $27 billion rose during this quarter from the $1.13 trillion in reported credit card debt during the second quarter of 2024. US consumers are increasingly relying on credit cards to make ends meet.  

The high increase in American debts is a result of an economic fall triggered by massive unemployment and higher costs of groceries, autos, and housing. 

Facing debt is a daunting challenge and can leave many people paralyzed. However, there are methods that can help you crush it and get out of debt. There are two popular methods that have been popular over the years and are truly helpful: the debt snowball method and the avalanche method.

The Debt Snowball method is popularized by Dave Ramsey, a finance expert, and author who is popular for his numerous books. The basic idea of this method is to pay debt from the smallest balance to the largest. Moreover, this is a fast way to pay off your debt. When you pay off the smallest debt in full, you roll the minimum payment you were making on that debt into the next smallest debt payment.

Knocking off your debt one at a time, from the smallest, will motivate you to keep plowing through your debt, all the way to being debt-free. The power of psychology and the debt snowball change your behavior in dealing with debt.

Moreover, in using this method, you don't actually need a finance degree to beat debt. The quick wins you get drive you to believe that you can actually pay off your debt. 

Here are some considerations you need to think about: 

1. Interest Costs. If you want to prioritize paying off with the smallest balance first, you might end up paying more in total interest over the life of your debts.

2. Longer Repayment Timeline. The overall timeline of your debt repayment may extend. This might not be a cost-effective strategy in terms of minimizing interest payments and achieving debt freedom sooner. 

3. Not Suitable for High-Interest Debt.  Credit card balances or high-interest debts that are significantly higher than smaller debts may result in substantial charges over time if using the debt snowball method. 

On the other hand, the Avalanche Method is popularly used for debts with high interest rates. The idea is to pay first the debts with high interest while making minimum payments on other debts.

This method is best for people who are patient and logical spenders; It will take time until you see or feel the progress of paying off debt, but it is worth it.

 Here are some considerations you need to think about:

1. Interest costs. Since you are targeting high interest rates to pay first, it reduces the overall cost of debt. 

2. Repayment Timeline. The timeline will be shortened. This is a cost-effective strategy in terms of minimizing interest payments and achieving debt freedom sooner. 

The snowball method is perfect for people who love the personal satisfaction of knocking off the debt list, while the avalanche method works for those who want to save money while paying off their debts. 

Knocking off debt using any method is fine, as long as you dedicate yourself to paying for what really needs to be paid. It will always be your personal choice. The two methods mentioned are similar; the difference is only the order of paying off your debts. 

Hey! I’ve been using MaxRewards to earn more credit card rewards and cash back. Sign up with my referral code austinb2376 and connect an account. You can thank me later💳🚀 https://maxrewards.app.link/austinb2376