Pay Off Debt in the New Year

A fresh year offers the chance to make constructive adjustments and establish new objectives. For many people, this entails taking action to deal with their debt. There are a number of ways that can help you reach your financial objectives in 2021, regardless of whether you want to pay off debt from the previous year or embark on a new journey toward debt freedom. Here are some suggestions for paying off debt in the upcoming year.

1. The first step in getting out of debt is to make a budget. It enables you to identify where modifications need to be made in order to free up funds for repayment by assisting you in understanding how much money you have coming in and going out each month. Track your income and expenses over the course of a month, taking into account any additional revenue sources (such as side jobs) or non-monthly expenses (like car insurance). Make a strategy for how you will use those cash after you have monitored every penny you spent for a month.
2. It’s crucial to pay more than the minimum balance due whenever you can if you have monthly credit card or loan payments that need to be made. This can shorten the term of the loan or credit card balance and help you pay less interest on your account. If paying more than the minimum is now not possible owing to other financial commitments, think about making modest payments more frequently throughout the month rather than just once. By doing this, you can lower your overall principal balance more quickly and cut down on interest charges over time.
3. As opposed to the “debt avalanche” method, which pays off debts from highest interest rate to lowest interest rate, the “debt snowball” method pays off debts from smallest balance to greatest balance. You gain momentum and a sense of success when you pay off lesser sums first; this might help you stay motivated rather than feeling overwhelmed by higher balances that are due down the road.

Paying off debt isn’t easy but it can be done by creating a budget that works for you, paying more than just minimum payments when possible and taking advantage of debt snowball method. For any questions about debt relief and finding financial freedom in 2023, contact one of our team to speak to a  Houston bankruptcy lawyer today.