Savings Day – Pay Off Consumer Debt
Want to save more money? Pay off your consumer debt!
The Federal Reserve Bank of New York reported that consumer debt reached a record high during the 3rd quarter of 2021. Mortgages and auto loans contributed with their significantly higher prices. Now there are two main methods of paying off debt – the ‘debt snowball’ and the ‘debt avalanche’. Both are similar and reliable ways to get you out of debt faster so you pay less interest. Last week I talked about the debt snowball. Today, I’m covering the debt avalanche.
First, you organize your debts from the highest interest rate to the lowest. Then, you attack the debt with the highest rate first. Just like when debt snowballing, you continue making minimum payments on all your other debts. When you pay off one, you apply that payment towards the next until they’re all paid off. The method is strategic because it saves you time and money. You save the most money with the debt avalanche method because you eliminate months of steep charges. This gives you more cash to put towards reducing the other debts. It takes more discipline and commitment since entire debts won’t disappear as quickly as the debt snowball method. However, if you can stay motivated on your own, this method may be what you need. It’s especially helpful with high-interest rate debt, like store credit cards or a cash advance loans. Overcoming debt is stressful, but the Bible tells us in Philippians 4:6, “Do not be anxious about anything, but in every situation, by prayer and petition, with thanksgiving, present your requests to God.”
And if you’re struggling to make payments on your credit cards, I highly recommend Christian Credit Counselors. They’ll create a debt management plan that works for you. For more information call the Crown Helpline: 800-722-1976 or visit online at crown.org/ccc.