You’ve heard the phrase, “Slow and steady wins the race.” The same is true when it comes to reducing debt. Start with your smallest debt and then work on your larger debts.
If debt is a leading contributor to your overall stress, you’re not alone. The national average for household credit card debt is $6,194.1 The average total household debt, including mortgages, is $135,841.1 That volume of debt can be a real burden on your wallet, relationships and ability to achieve other important goals like saving for retirement.
TRY THE DEBT SNOWBALL METHOD
Step 1: List your debts from smallest to largest.
Step 2: Make minimum payments on all your debts except the smallest.
Step 3: Pay as much as possible on your smallest debt.
Step 4: Repeat until each debt is paid in full.
Eliminating your smallest debt first and gaining momentum as each balance is paid off is the key to becoming debt-free. Soon, the second debt will follow, then the next, and repeat until you’re debt-free. Stick to the plan and begin leading a healthy progression toward reducing your debt.
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¹Experian 2019 Consumer Debt Study. March 9, 2020
[Securities disclosure] ACR# 3348776 12/20