If you went a little overboard this past holiday season (or didn't create a budget at all), David Sant, Chief Marketing Officer for Cyprus Credit Union, says fortunately, there are some strategies you can use to help get your debt under control.
Here are four methods for paying off debt:
Popularized by Dave Ramsey, this is a method in which you start small and end up debt free. When paying off debt you make the minimum payments on all your debts except the one with the smallest balance, which is where most of the money should go. Once you get the smallest debt paid off, move to the next smallest, and so forth, until you finally pay off your largest debt.
Unlike the snowball method where you start small, with the avalanche method you go big. Start with the debt that has the highest interest rate and pay it off first, then the next highest rate, and so forth. This option may help you save more money over time through not having to pay that high interest.
Consolidation is when you combine multiple balances into one loan from a single lender. You apply for one larger loan that you can then use to pay off your other debts. There are many loan options available and we will help you find the option that works best for you. Consolidated loans often have a much lower rate and the monthly payment is fixed for a set period of time, usually two to five years.
If you feel you`re in too deep and need some help paying off your debt, a debt management plan may help. You`ll develop a plan with a nonprofit credit counseling agency, and this becomes your structured road map to being debt free in three to five years. Unlike filing for bankruptcy, going this route will not impact your credit score.
For more financial advice and tools, please visit: cypruscu.com.