4 Ways to Get Out of Debt


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If debt is slowing down your goal of reaching financial freedom, don’t despair. There are several methods you can use to dig your way out of debt and boost your financial health.

Here are four ways to get out of debt.

Debt avalanche

The debt avalanche method is one of the most popular ways to chip away at debt. With this method, the goal is to pay down debt with the highest interest rate first and then work your way down the list until all your debts are paid off. By focusing on debt with the highest interest rate, you’ll save money on interest.

Start by listing your debt from the highest interest rate to lowest. Pay more than the monthly minimum payment on your balance with the highest interest rate and continue to pay the minimum on your other debts. After the highest debt is satisfied, take the money you used to pay that debt and roll it over toward payments on the debt with the next highest interest rate.

Debt snowball

The debt snowball is different from the debt avalanche because interest rates are not the focus when paying debt. With this method, the focus is on paying down debts with the lowest balance first. This way, you can realize small wins along the way and stay motivated. When using the debt snowball method, you’ll pay extra toward the lowest balance each month while continuing to pay the minimum on all other debts.

Debt snowflake

The debt snowflake is one of the simplest methods for tackling debt. All you have to do with this method is use extra cash to pay off your balances. For example, if you received money from a rebate check, you would use this additional money to pay off an outstanding debt. Or if you had a garage sale, you would take whatever you earned from the sale and apply it toward your balances. It’s all about making the best use of extra money you earn or find during your day-to-day activities.

Debt tsunami

If none of the above methods work for you, try using the debt tsunami. The purpose of the debt tsunami method is to pay off the debt that bothers you the most. Personal finance expert Adam Baker says on his website Man versus Debt that the debt tsunami is about prioritizing debt with the most emotional impact. When reviewing your debts, there’s likely one that weighs heavily on you and you wish you could get rid of it as soon as possible. With the debt tsunami, that’s the debt you would pay down first.

Tips for paying down debt

  • Be patient. You didn’t get into debt overnight and you won’t get out overnight. Be patient with yourself and realize the road to debt freedom takes time.
  • Develop a spending plan. Without a clear budget, it’s easy to lose sight of your goal and overspend. Take time to track spending and develop a budget you can stick to for the long haul.
  • Get help. A financial planner or credit counselor can offer advice and assist you with developing a financial plan that works for you.

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