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What is the best strategy to pay down my debts?

On Behalf of | Mar 2, 2017 | Credit Card Debt

When you are living with a lot of sources of debt in Tennessee, the thought of paying them all off can seem overwhelming. Paying only the minimum amounts due means that it can take years to ever dwindle those balances down. In order to ever successfully become debt-free, it is important to have a strategy for paying off your accounts in full. While it may depend to some extent on your personality, research has shown that one method is superior for most people.

The most important thing to do if you ever hope to be rid of your debts is to stop spending. Once you have taken that step, Money Tips reports that a recent study found that using something called the snowball method may be your best bet for reducing your debt.

Using the snowball method, you would focus on paying off your smallest debt first while continuing to pay only the minimums on all of your other accounts. By doing this, you should be able to pay off that smallest balance relatively quickly. Then you would tackle your next smallest debt and so on. One huge benefit to doing it this way is the psychological boost that goes along with paying off a debt once and for all. Paying off the smallest one first provides motivation to keep it up until you have paid off all of your creditors.

In certain situations, it may make more sense to tackle your debt with the highest interest rates first, as it will save you money over time. However, that strategy, known as the avalanche method, does not necessarily come with the emotional benefits that the snowball method provides. This information is general in nature and should not be considered legal advice.


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