To choose the right debt payoff strategy, start with some questions about your budget and preferences. What do you value most? Do you prefer to save money on interest or pay off your entire balance? How motivated are you to repay your debt? These questions can help you decide which approach might work best for you.
Paying Only the Minimum
The least aggressive debt repayment strategy is making only the minimum monthly payments. This approach is best used when your primary goal is to avoid falling behind on your bills. It’s also recommended when you want to protect your credit score because missing one or two payments could cause your rating to dip just enough to make it harder for you to qualify for loans and mortgages.
Paying More Than the Minimum
There are ways to speed up your debt payoff without having to cut out anything important like food or rent. You can pay more than the minimum and use a snowball method to pay down your debt faster. This involves prioritizing paying off your credit card bills with the smallest balances first, followed by the next smallest, and so on. The idea behind the snowball method is that once you've paid off the smallest balances, you'll have more money left over to tackle the next highest balance.
Using a Balance Transfer Credit Card
Opening a new credit card when you already have credit card debt may not seem like the most logical idea. After all, you’re adding another bill to your current one and you don’t want to add even more stress to your life. However, using a balance transfer credit card can help you move your debt from a credit card with a high interest rate to a credit card with a lower interest rate, therefore saving you money in interest.
Debt payoff strategies aren't just for people struggling with unmanageable debt loads. They're also a great option for those who want to make their payments affordable while paying down high interest debt like credit card balances. Find the debt payoff strategy that works for you right now and keep working to pay off your debt.
If you are interested in receiving more information or help with selecting the right debt payoff strategy for you, contact the office today.
This material was developed and prepared by a third party for use by your Registered Representative. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security. The content is developed from sources believed to be providing accurate information.
Which Debt Payoff Strategy is Right for You?
October 28, 2022