Get Serious about Paying Debt with these Tips!
According to a report from the Federal Reserve Bank of New York1, household debt in the United States grew to record high numbers in 2024.
If you are one of the many people having troubles paying down debt, here are a few strategies to help you make some progress in 2025!
- Pay more than the minimum, even by just a few bucks. The faster you pay off your debt, the less interest accrues – and you’ll save money in the long run.
- Refinance for a lower rate. Many financial institutions offer refinancing options for mortgages, auto loans, student loans and more.
Another way to refinance is to combine all your debt through a debt consolidation loan – a personal loan that could have a lower interest than your various debts. - Stay disciplined. Try your best to avoid unnecessary splurges while you pay down debts. Most of us want to use work bonuses, big birthday checks or inheritances to splurge and treat ourselves. But paying off debt requires sacrifice. Next time you get a big chunk of change, put that towards a loan payment!
- Find the debt repayment strategy that works for you. There are many different methods of repaying debt. Try them out and pick the one that works for you! Here are a couple to get you started:
- The Snowball Method. In this method, you pay the minimum payment on all your loans except for the smallest, which you pay off as aggressively as you can. By “snowballing” your money to the smallest debt, you can eliminate them quicker and move on to the next smallest.
- The Avalanche Method. The debt avalanche helps you save money on interest by making minimum payments on all of your debts, and use whatever extra you have left to pay down your highest-interest debt first. From there you’ll move on to the next-highest, and so on.
- The Snowball Method. In this method, you pay the minimum payment on all your loans except for the smallest, which you pay off as aggressively as you can. By “snowballing” your money to the smallest debt, you can eliminate them quicker and move on to the next smallest.
1”Household Debt Rose Modestly; Delinquency Rates Remain Elevated” Federal Reserve Bank of New York, 13 Nov. 2024, Household Debt Rose Modestly; Delinquency Rates Remain Elevated - FEDERAL RESERVE BANK of NEW YORK.
