Scrabble game pieces spelling out "debt"

Two tried and true methods of paying off your debt

Does paying down debt sometimes feel like running on a treadmill to you? Every month, you pay off a little of one loan, and a little of another card, but it ultimately seems like you’re going nowhere. If so, BetterMoneyHabits.com can help you come up with a realistic debt repayment strategy.

There are many ways to pay down your debt, but if you’re lost, try starting with one of these two tried and true methods.

The snowball method

When using the snowball method of debt repayment, pay off your debt by targeting the smallest balance first. The idea behind this method is that you’ll feel a boost each time you pay off a new account, and those small victories keep you motivated. If you have trouble sticking with a plan, this could be the best option for you.

Step 1: Make a list of all of your credit card balances from lowest to highest. If two balances are similar, prioritize the card with the higher interest rate.

Step 2: Pay the minimum payment on all of your cards each month.

Step 3: Take any additional money you have available and put it toward the debt with the smallest balance. Do this each month until you’ve paid off your smallest debt.

Step 4: When you pay off a debt, do not use that account again until all your debt is gone. One clever idea to prevent any impulsive use of your card is to freeze it in a block of ice. Whatever you do, do not add any more debt while trying to simultaneously pay it off.

Step 5: Take the money you were paying toward each paid-off account and put it toward the next smallest balance on your list. The amount you put toward each larger debt will grow and grow.

The high rate method

When using the high rate method to pay off your debt, put the most money into your debt with the highest interest rate first. With this method, you will ultimately pay less in interest and get out of debt faster. If you want to get out of debt paying as little as possible, this could be the best option for you.

Step 1: Make a list of all your debts and arrange them by interest rate with the highest interest rate first.

Step 2: Pay the minimum payment on all of your cards each month.

Step 3: Take any additional money you have available and put it toward he debt with the highest interest rate. Do this each month until you’ve paid it off.

Step 4: When you pay off a debt, do not use that account again until all your debt is gone. It might help to take it out of your wallet and place it in a drawer. Whatever you do, do not add any more debt while trying to simultaneously pay it off.

Step 5: Take the money you were paying toward your highest balance and now concentrate on the debt with the next highest interest rate.


Need motivation and support to reduce your debt? Let America Saves help you reach your savings and debt reduction goals. It all starts when you make a commitment to yourself. Take the first step today and take the America Saves pledge to save money, reduce debt, and build wealth over time. And it doesn’t stop there. America Saves will keep you motivated with information, advice, tips, and reminders to help you reach your savings goal. Think of us as your own personal support system.

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