Creating a Strategy To Pay Off Your Debt

A recent survey found that some 63% of Americans would be unable to handle an unexpected $500 expense, this information shocked many in the financial community. Americans themselves, however, were far less surprised. They know that they are living paycheck to paycheck, a lifestyle that more than three-quarters of workers freely admit to.

It is also worth noting that most Americans do not currently have a budget in place. In fact, less than a third of American households have a spending plan they can rely on.

Given this challenging environment, it’s not surprising that so many Americans would find their finances completely derailed by an automotive breakdown or the untimely breakdown of a household appliance.

If you are one of the three-quarters of Americans living paycheck to paycheck, with high levels of credit card debt, it may seem like the goal of living debt free is impossible.

Fortunately, that is not the case. With the right strategy, you can climb out of that credit card hole and live a more successful financial lifestyle.

Creating a Debt Reduction Plan

While there are many companies who promise they have the best solution for your debt, most of the time you don’t actually need assistance from a company.  With just a little effort and planning you can pay off your debt on your own, using several proven debt repayment strategies.

Two Common Methods to Pay Off Credit Card Debt

Two common methods for credit card debt reduction typically break down into two categories – low balance debt reduction and high APR debt reduction. These two strategies have advantages and drawbacks, and each one is reviewed in more detail below.

The “Debt Snowball” Repayment Plan

Followers of Dave Ramsey may recognize this strategy as the “Debt Snowball.” It involves paying off the lowest balances first, then using that momentum to tackle larger and larger balances. There is real evidence that this method works the best, since it uses consumer psychology to make paying down debt easier.

The “Debt Avalanche” Repayment Plan

This strategy takes a different approach, by tackling the balances with the highest interest rates, regardless of their size. This method is commonly referred to as the “Debt Avalanche.” 

No matter which strategy you choose, the debt reduction process works in largely the same way. Taking a step-by-step process is generally the best approach, and those steps are:

  1. Maximizing available cash flow through smart budgeting and eliminating unnecessary household expenses.
  2.  Making the minimum payments on all credit cards except for the targeted one.  The targeted credit card is the one at the top of your list – either the one with the lowest balance or the one with the highest interest rate.
  3. Applying every penny of free cash to paying off the balance on the targeted credit card. Keep making lump sum payments to the targeted credit card until the balance is paid in full.
  4. Continue the debt payoff process by applying all free cash flow to the next targeted credit card – until all balances have been paid in full.

RELATED:   5 Steps To Quickly Eliminate your Debt

Get a Customized Debt Reduction Plan

Creating a smart plan to pay off your debt starts with choosing the right method, i.e. deciding between the “Debt Snowball” and the “Debt Avalanche.”

If your goal is to reduce the amount of interest you pay, the debt avalanche can minimize those interest payments by prioritizing high-interest debt.

If your goal is to stay motivated and see results quickly, the debt snowball is probably the best choice. By prioritizing the smallest balances, the debt snowball method provides faster results, making it easier to pay down debt and finally eliminate it.

No matter which debt elimination method you choose, you need to develop a comprehensive plan – one you can stick to for the long haul.

At Debt to Zero you can create your own customized debt reduction plan to determine your payoff period, track your progress and stay motivated until your debt is abolished. Getting out of debt can be difficult, but the hardest part is getting started.


Get your free debt repayment plan here!


Make today the day you take the first step on the road to Debt Freedom by using our exclusive debt calculator and creating your own customized debt repayment plan. 

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