Day 5: Reduce Debt – Make a plan to pay off high-interest debt such as credit cards and personal loans. Consider strategies like the debt avalanche method to accelerate repayment.
Here are a few proven strategies for reducing debt:
The debt avalanche method is a debt reduction strategy that focuses on paying off debts with the highest interest rates first. Here a a few strategic ways to accomplish your goals.
Begin by listing all of your debts, excluding your mortgage, in order from the highest to the lowest interest rate. Include the name of the creditor, the total balance, and the minimum monthly payment for each debt.
Focus on paying off the debt with the higher interest rate, while continuing to make minimum payments on the debt with the lower interest rate. Determine how much funds you can allocate toward a. specific debt each month. This could come from cutting expenses, increasing income, or reallocating funds from non-essential spending categories.
You may also consider the Snowball method by Dave Ramsey
https://www.ramseysolutions.com/debt/how-the-debt-snowball-method-works
The debt snowball method is known for its psychological benefits, as it provides quick wins by paying off smaller debts first. This can help boost motivation and momentum, making it easier to stay committed to your debt repayment journey.
While the debt avalanche method may not provide the same immediate psychological wins as the debt snowball method, its focus on financial efficiency can be appealing to individuals who are motivated by long-term savings and financial goals.
By implementing these proven strategies and staying committed to your debt reduction goals, you can gradually eliminate your debts and achieve financial freedom.