Sticking to a New Years resolution can be difficult and even more difficult can be paying down debt. However, conquering debt such as credit cards can help you on the road to a debt-free year. High interest debt such as credit cards is often paralyzing. According to the Federal Deposit Insurance Corporation (FDIC), Americans paid about $104 billion in just credit card interest and fees alone. Paying off debt can seem like a never ending cycle, but here are some tips to ensure you keep 2019 debt-free.
- View your debt in chunks not as one mass amount – Viewing your debt as one large amount can be intimidating and make you feel like you will never pay off your debt. However, looking at your amounts in smaller chunks can help you create more approachable goals to paying off the debt. If you have multiple credit cards, it would be easier to think of them as separate amounts to pay off one at a time rather than one large sum to tackle every month. For larger sums of debt consider breaking up the amount into four even amounts to have a goal to pay down.
- Use the snowball method to pay down debt– Many Americans tend to pay off debt based on amounts. Some people might take the approach to pay off the balance with the highest interest, which is the avalanche method. The most common way to pay off debt seems to be the “balance-matching” method. In the “balance-matching” method, people tend to pay as close as possible to the amount they owe. However, these might not actually be the best ways to pay off debt, especially if you have multiple balances. A more effect approach to paying off debt is the snowball method. This method involves listing your debt from smallest amount to the largest. Then pay as much as you can to the smallest balance, but pay the minimum on other balances. This approach allows a more realistic way to completely payoff one balance. This benefits not only your credit but also helps to create momentum to continue to pay off one balance at a time effectively.
- Consider getting a loan to consolidate debt– The idea of getting a loan can sometimes seem intimidating or counterintuitive to paying off debt, but it can be an effective strategy for conquering high interest debt. Turning to a personal loan can help consolidate your credit card debt into one amount that can be more manageable and organized for some. Personal loans also can have much lower interest rates than credit cards, so you can save more money by paying down a loan rather than a credit card.
- Transfer your amount to a 0% APR credit card – A 0% APR credit card gives you a certain time period, usually 12-15 months, of interest-free credit. Making a transfer to a 0% APR credit card can be a smart decision as long as you are able to commit paying off the amount in that specific amount of time. This might be a good step if you have debt that you know you can pay off easily within that amount of time. However, if you have a large amount of debt that you estimate might take more time it might be best to consider another option.
- Make multiple payments – If you are really on a tight budget every month, it could help to still just pay the monthly minimum and then make another payment if you happen to have extra cash by the end of the month. Making multiple payments in one month can help you pay off debt and avoid acquiring more interest.
Starting the year by tackling your high interest debt can help you achieve a more carefree and money-saving year. Eliminating debt does not have to be an intimidating or impossible feat. With some careful planning and organization, you can be debt-free by the end of the year.