(MoneyHippo.com) – Most people in the United States carry some type of debt, and it’s difficult to get out from under those obligations without a strategy. Yet, carrying debt robs you of the opportunity to grow your wealth. Luckily, there are multiple ways to tackle your debt and get rid of it for good.
To incorporate these strategies, you’ll have to list every debt in your budget, including the balance, interest rate, and monthly payment. Eliminate unnecessary expenditures and calculate the maximum amount you could pay every month toward your debt. Once you do that, pick one of these debt-reducing methods.
- The Snowball Method: The first way is using the snowball method. Take the money you determined you could pay toward debt and apply it to the obligation with the lowest balance. Once you’ve paid off that debt, use the extra money you would’ve applied to that debt and tackle the next lowest balance. Repeat the process until you’ve eliminated all your debt.
- Debt Avalanche Strategy: Another method uses a debt avalanche strategy. Choose the debt with the highest interest rate and use your funds to pay off that debt first, using the fund you would have applied to the first debt and any savings to target the next highest after you’ve resolved the first.
- Debt Consolidation Strategy: The last way entails tackling obligations through debt consolidation. You would procure a personal loan combining all your debt under one umbrella and paying off the new loan with your maximized debt payment amount.
It might take some work and strict budgeting, but you can tackle your debt problems and minimize your financial stress along the way.
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