METHODS TO TACKLE DEBT

financial coaching loans money management personal debt personal finance Jan 06, 2023

Are you struggling to pay off your debt? You're not alone. With the rising living costs, many young adults feel overwhelmed by their financial obligations. But don't worry - there are solutions to help you tackle your debt and get back on track financially. Here are two popular methods for paying down debt: the snowball method and the avalanche method. Read on to learn more about these debt payoff strategies, plus why it may be beneficial for you to book a consultation call with a financial counselor:

  • The Snowball Method - This involves tackling your debts one at a time starting with the smallest balance first while making minimum payments on all other debts until that is paid off before moving on to the next smallest balance.

  • The Avalanche Method - This involves tackling your debts by order of highest interest rate first while making minimum payments on all other debts until that one is paid off before moving on to the next highest interest rate.

  • Booking a Consultation Call - A financial counseling session can provide personalized advice tailored to your situation, helping you understand how best to approach repaying your debt and create an action plan for getting out of it faster.

Lining Up Your Debt

Paying debt is not easy, but it can be done! You can pay off your debts quickly and easily with the right tools and strategies. One such strategy is known as "Lining Up Your Debt." This involves creating a list of all your debts (except for mortgages), so you can see what needs to be paid off. Don't discriminate! Car loans, student loans, personal loans, medical bills, and credit cards have to go! Can you imagine not having any payments? Once you pay off debt, you can invest more, save more, and have more money to spend on things you love! 

Once you have this list, you can use various tools to help put your debt in order. This could include an app or an excel template that will provide a month-by-month payment schedule and give you a projected date for being debt-free. With both methods, you only pay minimums on all debts except for the one you are focusing on. All extra money gets applied there.  

Strategies to Stay Motivated

Looking at this list may be overwhelming, so you should also set realistic goals and stay motivated to pay off debt quickly. Break your debts into smaller chunks and devise a plan to pay off each one. This will give you the motivation and focus needed to reach your goal. You can also set milestones or rewards along the way, such as treating yourself after paying off a certain debt or taking time off work when you finally become debt-free.

Also, make sure you keep track of your progress! This is key to staying on track and achieving success in becoming debt-free. Looking back and seeing how much progress you have made can be very rewarding and help you stay motivated. So don't forget to take a minute and celebrate each milestone! Good luck on your debt-free journey!

Next, let's go over the two most popular methods to order your debt.

Avalanche Method

The Avalanche Method is one of the best strategies for getting out of debt quickly and efficiently - especially if you have high-interest credit card debt. With this method, you start by paying off the debts with the highest interest rate first, then work your way down until all your debts are paid off. This way, you can save money on interest payments and make headway toward becoming debt free.

To make the Avalanche Method even more effective, you can use any extra money to make larger payments towards your highest-interest debt. This will help you get out of debt faster, significantly reducing what you owe in interest over time.

Additionally, it's important to stick with a budget and be mindful of your spending. This can help you avoid taking on more debt and ensure that you don't fall back into the same cycle of financial stress. With discipline, dedication, and a plan, you can use the Avalanche Method to become debt free in no time.

 

Snowball Method

This simple yet effective strategy involves listing your debts from smallest debt (balance owed) to largest. Not only does this provide small wins that will keep you motivated, but it also helps create a sense of progress and accomplishment as each debt is paid off.

I know firsthand how daunting tackling debt can be; I started with $81,439.69 in student loans and a car loan combined. But by using the snowball method, I was able to bring my total down to $68,665.39 is proof that this approach really works!

This strategy is especially helpful if you have a lot of low-interest debt like student loans and sometimes car loans. The debt snowball method involves taking your extra money each month and applying it to the smallest balance. Once that debt is paid off, you take the money you were using for that payment, plus any additional funds you can save, and apply them to the next debt on the list. This process continues until all debts are paid off, which can help make the journey more manageable and less intimidating.

By following this approach, you'll be able to see some success early on in your debt repayment journey. The sense of accomplishment that comes with seeing a debt completely paid off can motivate you to keep going until all debts are gone. Plus, since you're tackling your smallest debts first, you'll be able to free up more money and snowball it into larger payments that will pay off your higher balances faster.

So, if you're feeling overwhelmed by the accumulated mountain of debt, take a deep breath and start tackling it with the snowball method. With consistent payments and discipline, you'll be able to say goodbye to debt once and for all!

Booking a Consultation Call

Are you a Millennial or Gen Z adult feeling overwhelmed by your financial situation? You're not alone. With the current economic climate, many young people are struggling to pay off debt and make ends meet. Thankfully, there is help available in the form of financial counseling sessions tailored to your unique situation.

Booking a consultation call can provide personalized advice on how best to repay your debt and create an action plan for getting out of it faster. Here are some benefits of booking a consultation call:

  • Get insights about money management strategies that work for others like you

  • Learn tools and techniques to better manage your finances

  • Receive guidance from experienced professionals who understand the challenges facing young adults today

  • Acquire skills that will enable you to have greater control over your money in the future

Book a consultation call today if you're ready to take control of your finances and get out of debt. With the help of an experienced financial counselor, you can start taking actionable steps toward achieving financial freedom.

Conclusion

Tackling debt can be daunting and intimidating, but it is achievable with the right strategies in place. Whether you choose to use the Avalanche Method or Snowball Method for tackling your debts, what matters most is that you have a plan of action in place. Booking a consultation call from an experienced financial counselor can provide invaluable guidance on how best to repay your debts so that you can start taking steps toward achieving financial freedom sooner rather than later. Don't wait any longer - take control of your finances today!

 

Want to read more? Check out these articles:

Debt Payoff Planning with Brady Benware and Chris Schuermeyer

 

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