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There are many strategies that can help you reach your financial goals, and staying motivated can help you accomplish them. However, it’s important to remember that it takes a lot of planning and discipline to reach these goals – especially when debt is involved. The following guidelines can help you escape mounting debt and get your finances back on track.

Begin Budgeting

How much money can you put aside to begin paying off your debts? There are various ways to figure this out, such as gathering your monthly expenses and income through a bank account or using software like Mint.com. Then divide these expenses into different categories to get a better look at where your money is going and how you can cut back in certain areas. A budget will be your first step to paying off debt.

Determine Where You Owe Money

The next step is to identify all of the debts that you have, such as student loans, credit card balances, and auto loans. Having a list of these debts will help you determine how much money you need to put aside to pay off each one.

Decide on Your Approach

After gathering all of the necessary financial information, it’s time to start planning on how you’ll pay off your debts. Here are three simple strategies that will help you get started.

One of the most effective ways to pay off debt is by using small bits of money, such as the $20 bill that you found in your jacket pocket, to contribute to these principal amounts.

A strategy known as Snowball is designed to help pay off debts from smallest to largest, regardless of their interest rate. The Avalanche strategy, on the other hand, is very effective in targeting debts that have the highest interest rate. After paying that off, focus on the next highest interest rate to pay off. This eliminates the need to continue paying interest charges on all of your outstanding debt.

One of the most effective ways to pay off debt is by selling some of the things that you no longer use or appreciate. For instance, if you have a lot of unused equipment and furniture, it could be worth around $300 a month on an e-commerce site. This can help contribute to the principal amount and support the strategy you chose to implement into your budget.