Indianapolis Recorder’s Smart Money Week continues with Everwise Credit Union sharing tips for paying down debt.
Paying down debt is essential for financial wellness, as it lets you make your money work for you. The less you spend on interest, the more you can invest in your goals. With the right approach, you can reduce debt and regain control of your finances.
Here are 10 tips to help you get started on your debt-free journey:
- Create a budget.
Track your income, expenses, and cash flow. Knowing where your money is going gives you a clear picture of what you can allocate toward debt repayment. For help with creating a budget and building a budget surplus, check out our e-learning resources. - Organize your debt.
List every debt you owe, including credit cards and loans, along with their interest rates. Add up the total to understand how much you owe. - Trim non-essential expenses and boost your income.
Cut back on unnecessary spending and channel those savings into paying down your debt. If possible, look for extra income streams to speed up the process. - Choose a debt payoff strategy.
Use one of these methods: Snowball Method — Pay off the smallest debt first while making minimum payments on others. Once a debt is paid off, move to the next smallest. Avalanche Method — Focus on the debt with the highest interest rate first, then move on to the next highest. - Negotiate with creditors.
Many creditors are willing to lower interest rates if you demonstrate you’re serious about paying down your debt. Don’t hesitate to reach out and ask for a lower rate or better terms. - Consider debt consolidation or balance transfer.
If you have multiple debts, consolidating them into one loan with a lower interest rate or transferring balances to a card with a better rate can simplify your payments and help you save on interest. - Avoid debt settlement services.
Beware of services that promise quick debt relief. Many charge steep fees or are outright scams. Do your research before considering these options. - Set aside money for emergencies and stop taking on new debt.
Build emergency savings to avoid relying on credit cards when unexpected expenses arise. Stop adding new debt while focusing on paying off your current balances. - Track your progress.
Regularly review your budget and debt repayment plan to stay on track. Monitoring your progress keeps you motivated and helps you adjust if necessary. - Celebrate small wins.
Paying off debt is a marathon, not a sprint. Celebrate every small victory — whether it’s paying off a credit card or reducing your balance. These milestones will keep you motivated and focused on your bigger goal.
With patience and consistency, getting rid of debt is within reach. Stick to these strategies, and you’ll be well on your way to financial freedom and long-term financial wellness.
Catrina Tate is Vice President of Retail at Everwise Credit Union with 21 years of banking experience and is active in the Indianapolis community.
