Couple sitting on floor reviewing bills and calculating debt
Couple sitting on floor reviewing bills and calculating debt

the debt dilemma – realistic strategies to get back on track

4 ways to help you chip away at debt and pay off your loans for good

An estimated 75% of working Americans are in debt.1 Between credit cards, medical debt, car loans, and education repayment, inflation and high living costs are making it harder and harder for the average American to make ends meet. If you find yourself struggling and looking for a way to work towards a debt-free life, there may be options out there to help you reach your goals.

An image of snowballs getting increasingly bigger, rolling down a snowy hill

Look into the debt snowball method

Paying off debt is hard, but there are small ways to make big differences. The debt snowball is a strategy to help you pay off debt one bill at a time. It’s rather simple: start by paying off the smallest amount of debt. Make minimum payments on all your other bills and use any extra to apply to the smallest bill. Once the smallest amount is paid off, work your way to paying on the more expensive debts. As you continue, you’ll be knocking out debt after debt, and the process will help you repay until you’re debt-free. The small victories will keep you motivated, and you may even see the light at the end of the tunnel sooner than you expected to.

Make the minimum payments on all your bills, and take the extra money you now have to start paying off debts. For example, put $100/month towards your $1,000 credit card bill. In 10 months, you will have paid off your credit card bill, and you can face your $10,000 car loan. Since you’ve paid off your credit card, you can take your $100/month + the amount you were paying for your credit card minimum each month, and use the combined amount to knock out your car loan. Then you’ll be ready for your $30,000 student loan repayment. Continue using this strategy until your all your debt is paid off.

An image of an avalanche rolling down the side of a snowy mountain

Tackle interest with the avalanche method

The avalanche method is the opposite of the snowball method: start whittling away at your debt starting with the biggest amount, then work your way down. This method is especially useful if you have high-interest rates – while you may not see your debt resolve as quickly, you’d be saving more money in the long run because you’re not paying higher interest rates over an extended period of time. Knock out the highest debt/interest, then apply the paid off bill’s monthly payment to the next highest debt. By the time you pay off those big amounts, you’ll have the confidence to continue knocking out those lower amounts until you’re debt-free.

Think about debt consolidation and refinancing

Maybe you need more money to work with each month to start making payments towards your debts. If that’s the case, debt consolidation may be a helpful way to get the process started. Different banks may offer consolidation, which rolls multiple debts into one payment.2 Whether you’re looking for smaller monthly payments or lower interest rates, debt consolidation can help with student loans, credit card debt, mortgage payments, and more. It may simplify your finances and make it easier for you to pay off debts. Do your research and check into the offers that work best for you – you may find varying rates depending on your credit score and amount of debt you have.

Look for ways to make extra money

Sometimes it just comes down to needing more money. If you have debt you are just determined to get rid of, start looking into other streams of revenue. Maybe you can work for a food delivery service or start a small dog walking business. Is there a store you’ve always loved shopping at? Consider working part-time or on the weekends. Do you have old clothes lying around the house? Take them to consignment and see if you can get any extra cash out of them. What about technology, furniture, or other home goods you no longer need and/or use? Try selling them through local online marketplaces. When you take all your extra money and put it towards your debt, you may be surprised at how much you knock out.

It may seem stressful to look at the amount of debt you have, but it’s better to face it head on than put it on the backburner – even if it takes years to pay off. Not sure where to start? We’re here to help. For a personalized approach, get in touch with your local banking center to meet with a financial specialist and build a unique financial strategy. Don’t get discouraged by the amount of debt you have – financial freedom is within reach, and these small steps can help you get there.