Strategies for paying off debt
Hello Financial Healers,
Today is a great day to get out of debt. More US households this year are using credit cards to survive. I don’t want this to be you. Let’s get on the path to Financial Healing, and look at some strategies for paying off liabilities.
To get started, let’s examine the different types of debt:
Credit cards
Accounts payable (for businesses)
Monthly bills overdue
Unsecured loans
Family loans
Education loans
Vehicle loans
Pledges, promises, and IOUs
Mortgage loans
Other loans
Each debt has unique characteristics. Credit cards, for instance, carry high-interest rates, while mortgage loans have lower rates and longer repayment periods.
Which debt do I pay first?
There are 2 main strategies you can use: 1) the debt snowball or 2) debt avalanche.
Debt snowball
The debt snowball is a low-risk form of repayment. It has you pay off your smallest debt first, while making minimum payments on larger ones. This approach creates a sense of achievement and hacks your brain into feeling momentum, which is a valuable asset when making the long climb to debt-free living.
Debt avalanche
With the avalanche, users chip away at their largest debt, while making minimum payments on smaller ones. This technique requires more discipline, but can save lots of money by cutting down interest costs.
Tips for staying on track
If you find yourself feeling discouraged, use these ideas:
Create a budget: outline your income and expenses. Make sure you can meet consistent payments. If needed, adjust your spending habits.
Monitor progress: check your debt balances often. Track your growth. This helps maintain focus.
Celebrate milestones: acknowledge your victories. Each time you pay off a loan or bring down your debt to a certain percentage, take the kids to the park. Go on a date with your spouse. These rewards will inspire you to keep moving forward, even in hard seasons.
And that’s it!
Understanding repayment strategies is critical to achieving Financial Health. Debt isn’t evil, but it is bondage. One question I ask my clients is, “How much bondage are you willing to live with?”
In other news…
We have a guest speaker for June 21, 2023. I’m excited to announce Eric Weedon, a longtime attendee of My Money Time. He has a long history with financial instruction, and is going to share some powerful insight. I can’t wait to hear his wisdom.
God bless your Prosperous Soul,
Stephen K. De Silva
Speaking Wednesday June 21, 2023 - Eric D. Weedon, Finance Professor
About: Eric D. Weedon is an exceptionally accomplished and dedicated Finance Professor with a strong background in academia and extensive experience spanning over three decades in the fields of Investment/Portfolio Management, Finance, and Non-profit Management. With a profound understanding of financial services, Eric has demonstrated exemplary leadership in customer service, sales, and compliance.
Eric holds a bachelor’s degree in business management and an MBA in Finance. He is currently pursuing a Doctor of Business Administration (D.B.A.) program at the University of Phoenix and is committed to further enhancing his expertise. Throughout his illustrious career in the financial services industry, Eric has successfully led customer service and sales teams while also ensuring compliance with industry regulations. His professional accomplishments include being a Registered Principal with six FINRA licenses, including Life & Health, as well as holding designations such as the Certified Retirement Plan Counselor (CRPC) and the Accredited Asset Management Specialist (AAMS).
Driven by his dedication to education and his faith, Eric is passionate about teaching biblical principles on money and finance. He also seeks to empower non-profit organizations to balance financial resources and their ministry's vision harmoniously. In line with his commitment to his beliefs, Eric actively volunteers with Faith Driven Investors, where he leads several cohorts in the field of Biblically Responsible Investing.
Currently residing in Surprise, Arizona, Eric is happily married and a devoted father of five children, ranging from 18 to 28 years old. In addition to his finance career, Eric embarked on a journey to become a sound engineer in 2005, a skill that proved invaluable when his family ventured into missions in 2013. During their time in missions from 2013 to 2018, Eric utilized his Finance and Sound Engineering expertise to serve various communities across 17 countries. He had the privilege of providing sound support to notable ministries, renowned missionaries, acclaimed recording artists, and distinguished worship leaders from around the globe.