Quick Ways to Cut Your Debt

How to reduce your debt fast.

According to a recent study, the average American has about $104,000 in debt. That includes mortgages, credit cards, personal loans and more. If you’re knee-deep in debt, there are ways to dig out quickly. Try some of these methods below.

1. Choose a Strategy

There are two main ways to pay down debt: The debt avalanche method and the debt snowball method. When dealing with your debt, it’s best to pick a specific strategy, not just “wing it.”

• Avalanche. The avalanche method involves paying down your debts starting with the highest interest rate first.
• Snowball. The debt snowball method is when you pay down your debt from the smallest amount owed to the largest.

We recommend the avalanche method, but the important thing is to pick the strategy that you will stick with. 

2. Trim Your Budget

Once you have identified how you’re going to pay down your debts, it’s time to look at your budget.

• Cut Spending. Go through and reduce discretionary spending as much as possible. Remember, this is temporary. When your debt is eliminated, you can add back some of those items if you wish.
• Find Money. Use that extra money to pay down your debts each month.

3. Consider a Card

If your debt is mostly tied up in high-interest credit cards, consider opening a balance transfer card. A balance transfer card may offer you 0 percent interest for a small amount of time (usually 18 months). You can then pay down your debts without having to deal with the interest rates. Just make sure you can pay down your debts within the introductory timeframe. 

Do One Thing: Cut way back on unnecessary spending while paying down debts.

 

 

 

The material provided on this page is for informational use only and is not intended for financial, tax or investment advice. VisionBank, PurposeBank and/or its affiliates assume no liability for any loss or damage resulting from one’s reliance on the material provided. Please also note that such material is not updated regularly and that some of the information may not therefore be current. Consult with your own financial professional and tax advisor when making decisions regarding your financial situation.