Paying Down Debt Faster
The average American household carries over $137,000 in debt, including mortgages, car loans, credit cards, and personal loans.
But here's the good news: you don't have to be stuck with debt forever. With some smart strategies and a bit of discipline, you can start paying off your debt faster and achieving your financial goals. In this blog, we'll explore some of the best tips and tricks for paying debt faster, so you can take control of your finances and build a brighter financial future.
When we think about lottery winners, we likely imagine new cars and mega-mansions. But according to a recent survey conducted by the National Foundation for Credit Counseling® (NFCC®), most of us would actually use our lottery winnings to pay down our debt.
Among the 1,729 people who took part in this online poll, 87 percent indicated that they would use their winnings to become debt-free. Conversely, only 8 percent would use the funds to invest and grow savings before considering other priorities.
Since most of us will never win it big, the NFCC offers the following tips for paying down debt:
Rethink the approach toward debt management. When progress is slow on the road to being debt-free, consider increasing monthly payments to make faster progress. Additionally, consider prioritizing all extra payments to the accounts that are charging the highest interest rates. Even the slightest adjustments can make a big difference. Making extra payments toward debt is a smart way to pay off debts faster and save money on interest. It can also improve your credit score and free up funds for other financial goals.
Pay yourself first. Contributing to a personal savings account and 401(k) before turning attention to other expenses will help keep important financial goals in sight, and will maintain steady progress toward reaching them. It is crucial to deposit money into your savings and retirement accounts as they are the foundation of your financial security. By regularly saving and investing for the future, you can ensure a comfortable and stable life in retirement and have a safety net for unexpected expenses.
Declutter the debt. If dealing with more than a few accounts, it helps to merge them into a single loan or credit card with one payment. This is called debt consolidation, which works best when resulting in lower interest and fees. This can make it easier for individuals to manage their debts and may lower their monthly payments.
Source: www.NFCC.org
