What kind of debt are you carrying?
Most of us carry various types of debt -- student loan, credit card, home equity, auto loans, etc. A number of factors will determine which ones take priority: balance, interest rate (APR), tax deductibility, and term all have an impact. Let’s start by identifying what kind of debts you have.
- Debt Type (i.e., credit card, student loan, auto loan, home equity loan)
- Debt Holder (name of company holding your loan)
- Current balance
- Interest rate
- Minimum monthly payment
FAQs: Choosing a debt repayment strategy
When it comes to paying off debts there are a lot of things to think about — and the more you know, the more successful you’ll be. Here are some of the most commonly asked questions.
Should I pay off debt before saving for retirement?
When deciding the right strategy for paying off debt, it’s important to also factor in your retirement savings goals. Prioritizing your debt may seem like the best approach, but it could come at the cost of your long-term financial goals.
Need help determining the best balance for your situation? Check out our article, Pay Off Debt or Save for Retirement? Making the Case for Each
Avalanche method vs. snowball method – which strategy is better?
The avalanche method and the snowball method are two simple repayment strategies that can help you tackle your debts. If your goal is to save as much money as possible, then you may want to consider the avalanche method, which prioritizes your debts with the highest interest rates. If you’d rather focus on small wins and pay off your smallest debts first, then the snowball method might be your best bet.
Learn more about each strategy in this 5-minute read, Get out of debt…for good.
How do I get (and stay) out of debt?
Getting out of debt takes both time and diligence. It also requires taking a closer look at your financial habits to identify the spending behaviors that may have derailed your finances in the first place. Luckily, there are steps you can take to get on the right track, including creating a budget, improving your money management skills, and setting tangible financial goals.
Check out our guide to getting and staying out of debt for more information.
What are my options when it comes to paying down student loan debt?
Navigating student loan repayments can be overwhelming. The good news is that you have a number of options if you find yourself struggling to make payments.
If you have federal loans, you may want to consider switching to an income-based repayment plan or apply for a deferment. If your loans are private, you should look into your options for consolidation and refinancing.
To find out more about your options, check out our article, Paying Off Student Loan Debt During COVID-19 and Beyond.