How to Pay Off High-Interest Debt

04/14/2022

How to Pay Off High-Interest Debt

An estimated 80% of Americans have some type of consumer debt — student loans, medical bills, and unexpected car repairs are just some of the many reasons for debt. Sometimes it feels impossible to pay off. Here are just a few ideas to help you pay off your debt faster.

 

  1. Pay off debt with the highest interest rate first.

If you have several unpaid balances on different credit cards or other high interest loans, focus on paying off the one with the highest interest rate first, making extra payments when possible.

 

2. Keep track of what you owe.

It’s easy to forget what you’ve charged on your credit card each month. Keep track of your credit card balances and your loan payoffs in a computerized spreadsheet or on an old-fashioned ledger. Only charge as much on your credit card as you are able to pay off with cash at the end of the month.

 

3. Make a budget.

Setting a budget is key to financial success. But where do you begin? Try the 50/30/20 approach! Here's how it works: spend 50% of your after-tax pay on necessities (example: food); spend only 30% on wants (example: entertainment); use the other 20% to build your savings and pay off debt.

 

4. Practice minimalism - trim your expenses.

Take a close look at your current budget and spending habits. What can you do without? What subscription have you forgotten to cancel? That’s money you can now put directly toward your debt.

 

5. Sell what you’re not using.

Look around your home, in the closets, attic and garage. What items could other people use that you are not? Spring clean, sell what you no longer need or want and make extra money at the same time!

 

Debt can feel overwhelming. These strategies can help you make progress. If you’re interested in discussing what might be the smartest financial solutions for you, you can always talk to your community bankers right here at The Savings Bank! We are here to help you reach your financial goals.

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Sources:

 

investor.gov

ramseysolutions.com

shiftprocessing.com

experian.com

creditkarma.com

 

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