Between student loans, home mortgages, credit cards, and other forms of debt, the average U.S. consumer owns more than $90,000 in debt that needs to be repaid.
Not all debt is created equal. While credit card debt—and its sky-high interest rates—is often a top focal point for both consumers and debt counselors strategizing debt repayment, low-interest forms of debt like a mortgage are more affordable, and won’t necessarily create serious financial constraints.
Regardless of why you’re looking to pay down your debt, though, an achievable repayment strategy is one of the most important steps to take in reducing this debt and improving your financial outlook. Seeking out tips and tricks to pay off your debt faster, and more affordably, in 2022? Read on for 10 tips to help you achieve those goals.
Debt repayment requires that you commit some of your net income to those payment amounts. While you might already be doing this for your mortgage, car loan, or other types of debt, you’ll also need to budget space to cover credit card repayment and other forms of debt.
As part of this process, consider scaling back your spending across certain categories to create more space in your budget. This will improve your debt repayment abilities, speeding up repayment and saving money on interest.
Credit card debt is particularly dangerous if you settle for making the minimum payment. This small amount only pays off a small fraction of what you owe—and, in some cases, it might not even cover the amount of interest you’ve accrued over that period of time.
An expected payoff calculator can help you forecast how quickly your debt can be repaid at certain levels. Use this calculator to forecast the time required to pay off debt at the minimum amount—including the total amount of interest you will pay—and see how those numbers change when you make even small increases to that monthly payment.
Many credit cards offer promotional rates for balance transfers, including interest-free balances for a set period of time. This can be a great tool to help you achieve short-term financial relief from interest charges as you work to reduce your debt.
Struggling with a high number of debt accounts that all minimum charge payments? If you’re struggling to pay more than the minimum because of the volume of these payments, consider prioritizing repayment of the smaller debts first.
Once those debts are repaid, you’ll have extra funds to put toward the next-smallest debt, and can pay that off to continue freeing yourself from the constraint of minimum payments.
If your goals to pay off debt are compromised by your spending habits, get ahead of your own impulses and make those payments as soon as possible.
[Разрыв обтекания текста]By treating debt repayment like any other bill—and prioritizing these payments over non-essential spending—you can make sure you stick to your plan even when tempted to stray off course.
If high-interest charges for credit cards and other debt are making it difficult to make progress on repayment, shift your priorities to put the bulk of your funds to debts charging the highest interest.
Over time, this could save you hundreds or thousands of dollars in interest—and speed up your repayment by several months, if not more.
Consumers who are particularly motivated to pay off debt may want to consider a second source of income to fund those efforts.
Grocery delivery, food delivery, rideshare services, or another part-time job can provide extra money to put toward your debt—possibly without other changes to your budget.
Struggling with multiple debts, including several high-interest debts? A personal loan can help you consolidate these debts at a much lower rate, while also creating a single monthly payment and a clear schedule for when this debt will be repaid.
Ask yourself, “When will my loan be paid off?” or, “Am I on track to repay my debt?” The best way to keep track of this progress and plan out your financial future is by organizing debts into a single debt tracker than is printable or easily viewed and edited as your progress changes.
A debt tracker can help you organize all of your debts, prioritize debt repayments, and even calculate how long it will take you to pay off certain debts. If you’re using this debt tracking tool to monitor long-term debt repayment like your mortgage, you can also add in a mortgage payoff tracker to identify your full repayment date—or even to track the amount of equity you currently have in your home.
While you might be able to create a debt repayment plan on your own, a debt counselor or other financial expert may offer additional support in creating a plan that is achievable and cost-effective in minimizing interest and balancing debt repayment with your other financial demands.
A local financial institution can connect you to other resources, along with certain financial products, that can provide support in creating and fulfilling these debt repayment goals.
High amounts of debt may place a significant burden on your shoulders, but there are many strategies and tools to help you pay down debt and improve your financial outlook. As you make progress on reducing your debt, the finish line will gradually come into view—and you’ll be even more motivated to stick to your plan as you reach these important financial goals.
Saving and investing are the key to improving your financial stability and achieving long-term financial goals. But so is paying down your debt over time. Many consumers are stuck trying to balance these opposing forces when choosing how to manage their money and often aren’t sure when and where to prioritize debt repayment vs. personal savings.
Ultimately, the decision of whether to pay off debt, save money, or attempt both at once is a personal decision based on your current finances and your long-term goals. But there are certain questions you should ask yourself, as well as certain risks and opportunities to keep in mind, as you weigh your options and adjust your financial strategies accordingly.
Looking for help? Read on for tips on how to balance debt repaying and personal savings, as well as strategies to prioritize your financial goals while avoiding debt in the future.
When choosing how to manage your money, and where to place your funds, it’s important to first consider how much financial cushion you have in the event of unexpected costs, such as medical expenses, car repairs, or a loss of income.
An emergency fund is one of the most important financial assets you can have, giving you the security to cover those unexpected costs without resorting to credit cards, loans, or other forms of debt. Since these funds are essentially a safeguard against being forced to rely on debt to face a financial emergency, consumers are encouraged to prioritize an emergency fund over most other financial goals.
Although the high interest charged by credit cards may motivate you to pay down your debt faster, while building up emergency funds at a slower rate, aim to increase your emergency funds steadily over time. While experts recommend creating an emergency fund equivalent to three to six months of your living expenses, this may not be achievable right away. If not, make modest contributions that you can afford. Remember that every little bit can make a difference.
Many consumers struggle to prioritize saving when a cloud of debt is hanging over their heads. If this is the case for you, or if you’re worried that debt is your more significant financial concern right now, it’s important to create a plan for managing your loans and other debt to reduce their size and increase your comfort with saving.
Whether you’re fully debt-free or have simply paid down the big debts causing you financial stress, reduced debt can make it more practical to save money and build toward larger financial goals.
In addition to creating an emergency fund, consider the following saving and investing steps:
Looking for ways to stay out of debt in the future? As you pay off debt and prioritize savings, you can steer clear of more costly forms of debt through the following strategies:
