Quick Ways to Cut Your Debt

According to a recent study, the average American has about $104,000 in debt. That includes mortgages, credit cards, personal loans and more. If you’re knee-deep in debt, there are ways to dig out quickly. Try some of these methods below.

1. Choose a Strategy

There are two main ways to pay down debt: The debt avalanche method and the debt snowball method. When dealing with your debt, it’s best to pick a specific strategy, not just “wing it.”

• Avalanche. The avalanche method involves paying down your debts starting with the highest interest rate first.
• Snowball. The debt snowball method is when you pay down your debt from the smallest amount owed to the largest.

We recommend the avalanche method, but the important thing is to pick the strategy that you will stick with.

2. Trim Your Budget

Once you have identified how you’re going to pay down your debts, it’s time to look at your budget.

• Cut Spending. Go through and reduce discretionary spending as much as possible. Remember, this is temporary. When your debt is eliminated, you can add back some of those items if you wish.
• Find Money. Use that extra money to pay down your debts each month.

3. Consider a Card

If your debt is mostly tied up in high-interest credit cards, consider opening a balance transfer card. A balance transfer card may offer you 0 percent interest for a small amount of time (usually 12-18 months). You can then pay down your debts without having to deal with the interest rates. Just make sure you can pay down your debts within the introductory timeframe.

Do OneThing: Cut way back on unnecessary spending while paying down debts.

Original article by Chris O'Shea and adapted in partnership with SavvyMoney.