Debt when you're on a tight budget
There are a couple of paths you can take to pay off your high-interest debt when you're on a tight budget.
- The snowball method. For those who need to see progress, pay off the lowest balance first. You'll feel inspired to keep going.
- The avalanche method. Choose the debt with the highest interest rate to pay off first. This may require larger monthly payments and will take longer to see progress, but you will save the most money in the long run.
- If you need to prioritize your credit score, focus on paying down your credit cards first. Paying the ones you are near to maxing out will improve your score quickly by a few points.
- Set up payment plans, even if you can only afford a few dollars at a time. That way, your lenders can see you're paying something.
489
2.41K reads
CURATED FROM
IDEAS CURATED BY
"In fact, the confidence of the people is worth more than money." ~ Carter G. Woodson
The idea is part of this collection:
Learn more about moneyandinvestments with this collection
Identifying and eliminating unnecessary expenses
How to negotiate better deals
Understanding the importance of saving
Related collections
Similar ideas to Debt when you're on a tight budget
The avalanche debt method
In the debt avalanche method, you pay your debts from the highest interest rate to the lowest interest rate, regardless of balance.
You will pay less in interest if you pay off your debts in this order. You will also pay it off faster.
How to deal with your debt
Try to transfer your debt onto a zero-interest credit card (also known as a balance-transfer card). It will give you a limited time window where your debt won't accrue interest and allow you to get rid of your debt faster. But ensure you can pay it off within that window, otherwi...
The snowball debt method
With this method, you pay off your debts from the smallest balance to the largest balance, regardless of interest rates.
When you pay the smallest debts first, you start to clear your low debts away very quickly. Doing this feels empowering. Once you've paid off a debt, yo...
Read & Learn
20x Faster
without
deepstash
with
deepstash
with
deepstash
Personalized microlearning
—
100+ Learning Journeys
—
Access to 200,000+ ideas
—
Access to the mobile app
—
Unlimited idea saving
—
—
Unlimited history
—
—
Unlimited listening to ideas
—
—
Downloading & offline access
—
—
Supercharge your mind with one idea per day
Enter your email and spend 1 minute every day to learn something new.
I agree to receive email updates