If you’re struggling with paying down debt and don’t know where to start — you’re not alone. According to a 2022 study by Northwestern Mutual, the average American carries nearly $22,000 in debt (not including mortgages). Debt can be overwhelming, but by using creative ways to pay down debt, accomplishing your financial goals can be easier than it may seem. In this post, we’ll cover a variety of debt solutions you can use to help you achieve a debt-free life.
Develop a Plan
To be successful in your debt payoff plan, you need patience and consistency. It took some time to accumulate debt, and it’ll take some time to pay it off too. If coming up with a repayment approach feels too overwhelming, there are debt programs that can help you — learn more at Achieve.
The first step to paying off your debt is to know how much you owe. Next, decide how you’ll pay the balances off.
Balance Transfers
If you have several credit cards to pay off, consider doing a balance transfer to one credit card with a lower rate. Credit card companies will often send offers for balance transfers with a 0% intro rate for a certain period of time. This allows you to reduce the amount of interest you pay, helping you bring down your balances faster. Make sure you can pay off most or all of your debt before the intro rate expires.
Automatic Payments
Automating your payments ensures that your loans are paid on time every month and helps you avoid late fees and penalties associated with missed payments. If you choose not to automate your payments, make sure you set up payment reminders to avoid paying late.
Debt Consolidation Loan
If you’re juggling multiple monthly payments, a debt consolidation loan can be a great choice. It allows you to combine multiple debts into one payment and interest rate.
Prioritize Payoff Order
If you have several loans that you need to pay off and choose not to do a balance transfer or debt consolidation loan, you need to decide in what order you want to pay them off. Don’t just scatter random payments around — instead, develop a structured repayment strategy.
Two popular approaches are:
Snowball Method. This popular approach involves paying off each loan in order of the smallest balance to the largest while paying the minimum on all other loans.
Avalanche Method. With this method, you pay off your debts starting with the highest interest rates first.
Increase Income
While getting a raise isn’t always realistic, there are ways to increase the amount of money coming in. Apply the extra income towards your debt payments:
- Pickup some overtime
- Work a side hustle (Writing, Meal Delivery, Dog Walking)
- Sell items (Garage Sales, Online Marketplaces)
- Use your tax refund
Reduce Spending
Take a moment to review where your money goes and cut back on things you can temporarily do without:
- Set a budget
- Cancel or reduce non-essentials (Cable, Dining Out)
- Buy used (Furniture, Car, Clothes)
- Use coupons or coupon apps
- Use the library instead of buying books
- Shop around for lower insurance premiums
Do-It-Yourself
While it’s nice to have someone else do things for you, the costs can really add up. If you can realistically handle certain tasks, try to DIY:
- Mow your lawn
- Cut your hair
- Walk and groom your dog
- Paint your nails
Tackling debt can be challenging, but with some planning and commitment, you can regain control over your finances. There are many creative ways to pay down debt, including paying off small balances first, combining multiple loans into one, or reducing non-essential spending. Debt solutions aren’t a one-size-fits-all strategy. There are many options to choose from, so take the time to review your situation and pick the best option for your financial goals.
