By Violette Bishai

Debt has become a whispered word in the American household, a word that is looked away from in fear of facing a harsh reality. Yet the only way to eventually reach a debt-free life- it is the very thing that must be done. As Eleanor Roosevelt once said, “One step at a time, eventually discovering we have the strength to stare it down.”

Make a Change

Brew a cup of tea, and find a pen in your favorite color. Write down the last few big purchases you’ve made and determine if they were absolutely necessary. You’ll notice a few patterns: eating out, shopping etc. Commit to yourself to a change to be made and stick to it. It does not have to be a big change right away, start off small in eliminating the reasons you went into debt in the first place.

Debt Payment: Higher Interest Rate Method

One way to handle debt is the “higher interest rate method.” This means, debts with highest interest rates are addressed first. Once this is paid off, the next highest is addressed and so forth. In doing this, the most costly debt is paid off first freeing you financially.

Debt Payment: Snowball Method

Another method to approach debt is the “snowball method.” This refers to addressing the smallest debt first, and then moving to the next. This method shows more progress more quickly and thus motivating you to continue in doing so.

Debt Payment Methods: Round up Payments

Any extra amount you pay each month towards your debt, round it up. For example if your car payment is $387, pay $400, in the course of a year that’s an additional $180 paid!

Debt Payment Methods: Pay Bi-Weekly

Split your monthly debt payments in half and pay them Bi-Weekly instead of paying one lump sum monthly. This way you’re paying in smaller increments and it’s not an overwhelming amount at the end of the month.

Debt Payment Methods: Consider Extra Payments

Though it may be painful, any extra payments go straight to paying down your principal balance. This will get your loan paid off sooner and avoids more interest from accruing.

Save

One of the main reasons behind debt is lack of emergency funds. A car breaks down or a ceiling leaks and you are forced to turn to a credit card or a personal loan. If you currently do not have money set aside, start there.  Set up an automatic savings account, and even if its small increments that go into it once or twice a month, they’ll add up.  Set short and long term goals and in a year, you’ll thank yourself.

What you can do now

Cut up a credit card

Post something you own for sale

Write down a goal to earn more money

Transfer a high-interest rate balance

Write down your total debt and debt ratio

Reexamine your budget

Make an extra debt payment

Look into credit counseling

Ultimately, it is up to you to decide what works best for your financial situation. Whatever you choose to do, don’t overwhelm yourself, take it one payment at a time.