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Financial Literacy

3 Ways to Pay Off Debt

Bearded man in a red shirt sitting at a table, talking on a smartphone, and holding a piece of paper

Debt can snowball easily. Here’s how to keep your finances safe from frostbite.

In today’s world, it’s almost impossible not to have some form of debt to your name. Whether you have loans for your education or purchasing your car, or a low balance credit card for emergencies, it’s important to maintain a healthy debt to income ratio. Some debt is good for your credit, but it should be kept at a manageable level. Let’s talk about how to pay down or pay off your debt.

1. Maintain a Budget with Priorities

A manageable level of debt can be maintained by creating and sticking to a budget that prioritizes payments on debts. Make adjustments to your budget that allow you to make payments to your debts by focusing on your most expensive debt first and trying to pay more than the minimum balance. Then, you can reallocate the money spent paying on that debt to your next greatest debt. In this way, the snowball effect of debt can work in your favor.

2.Make Extra Money with a Side Gig

Side jobs or “side hustles” are more popular than ever as more and more people find themselves having trouble saving money and tackling debt. Inflation in the cost of living combined with an almost stand still of increased pay make it almost impossible for the average full time worker to get ahead. If you have a hobby that can make you money and the time to do it, go for it! You can even sell items you don’t use anymore or take online surveys for extra cash. Allocate that money specifically for debt and you can watch your balances shrink.

3. Refinance or Consolidate Debt

Sometimes, debt can need a little more strategic financing to solve. If you feel overwhelmed by your debt, it may be good to look into refinancing or consolidating your loans. Refinancing your loans could help you get a lower interest rate, reducing the total debt paid. Consolidating your loans can also lower your overall interest rate and centralize your payments. This way, you can have peace of mind knowing your bills have been covered with one simple payment.

We offer a variety of banking options that could help you get out of debt. From a savings account to help you accumulate money to pay off debt to personal finance loans, we can help. If you’re struggling with your debt, talk to your banker about products or services that could help you manage your finances responsibly and avoid bankruptcy. We’re here to help.

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