“The more debt you have, the less money you have to put toward savings.”
It can be hard to know when to pay down debt and when to focus on the here and now.
When paying down debt, there are a few different strategies. These can be:
- Focus on paying down the debt with the highest interest rate first
- Focus on paying down debt with the highest balance first
- Focus on paying down debt with the lowest balance first (snowball method)
Paying down debt is very empowering. When you make payments toward your debt or pay it in full, it gives you energy and shows you that you really can overcome obstacles. Plus, it helps you increase your credit score and lower your overall stress levels!
However, there are a few things you should know about the debt payoff process:
- For some debts, you can face a penalty for paying it off early
- Your credit score may decrease when you close a credit account
- You may want to have cash on hand rather than putting all your money into your debt payoff plan.
Listen to this episode to learn how to audit your income and expenses so that you can begin your debt payoff journey feeling empowered and excited!
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RESOURCES MENTIONED:
- Youtube playlist for paying down debt
- 4 Key mindset changes to make when paying off debt
- Our first episode can be found here
THIS WEEK’S THINK LIKE A SAVER CHALLENGE:
Take a few moments to evaluate where you are in your debt payoff journey, then celebrate where you are right now.
If you recently decided to start paying off your debt, celebrate this decision. If debt repayment isn’t a priority for you right now, we challenge you to imagine what your financial life would be like if you were prioritizing debt repayment, and assess whether this is something you could begin to tackle. And, if you do not have debt, take time to celebrate the journey you went on to get to this place!
