If you are one of the many people who are looking to pay down your debts in the new year, know that progress is possible! All you need is a little discipline and a solid plan. Check out these helpful tips to get started:
- Pay more than the minimum, even if it’s just a few dollars. The faster you pay off your debt, the less interest accrues – and you’ll save money in the long run.
Set up automatic payments for more than the minimum so that you never miss or forget a bill!
- Explore refinancing options. Many financial institutions offer refinancing options for mortgages, auto loans, student loans and more. Do some research and see if a refinance would save you some money.
Another way to refinance is to combine all your debt through a debt consolidation loan – a personal loan that could have a lower interest than your various debts.
- Stay disciplined. Try your best to avoid unnecessary splurges while you pay down debts. Most of us want to use work bonuses, big birthday checks or inheritances to splurge and treat ourselves. But paying off debt requires sacrifice. Next time you get a big chunk of change, put that towards a loan payment!
- Try getting a side hustle. Pick up a few food delivery or rideshare shifts on the side and use 100% of those profits to pay down debts. Even just a little bit of extra money toward your monthly payment adds up!
- Find the debt repayment strategy that works for you. There are many different methods of repaying debt. Try them out and pick the one that works for you! Here are a couple to get you started:
- The Snowball Method. In this method, you pay the minimum payment on all your loans except for the smallest, which you pay off as aggressively as you can. By “snowballing” your money to the smallest debt, you can eliminate them quicker and move on to the next smallest.
- The Avalanche Method. The debt avalanche helps you save money on interest by making minimum payments on all your debts and using whatever extra you have left to pay down your highest-interest debt first. From there you’ll move on to the next-highest, and so on.
