New Year Tip: Avalanche Your Way Out of Debt

Are you resolved to get out of debt this year?  

The average American spends a significant amount of money on interest payments. Think credit card balances, student loans, store accounts, and mortgages. Reducing the amount of money that you’ve borrowed is an opportunity to give, save, and invest more.

So, where do you start? Use your income tax refund to pay off your highest-interest debt first. It’s the one costing you the most and will provide the biggest relief to get it paid off. Next, adjust your withholding tax or estimated quarterly payments to be sure that you don’t get a tax refund. This could provide you with several extra hundred dollars per month that can be applied toward debt reduction. These two things alone, a tax refund and adjusted withholding taxes, could reduce your debt by thousands of dollars. Now that’s a good way to start the New Year, but remember that next year you won’t have that refund, so you’ll need to budget wisely throughout this year.

After paying off the highest interest-bearing note, work your way through the next, then the next, and the next. This Avalanche method will save you a lot of money in interest payments. Commit to stop borrowing now and learn to live on a budget. Ask God to give you the strength and resolve to give you the self-control you need. Discipline your spending by learning to say “No” to what you want today so you can say “Yes” to what you need tomorrow.

For some, credit card interest and penalties are out of control, but there’s hope! A professional, compassionate third party can help break the downward spiral and get you back on track this year. If you’re struggling with overspending on credit card debt, Christian Credit Counselors will help. They’ll create a debt management plan specifically for you. For more information visit online at crown.org/ccc.