Prioritize paying down debt for more financial freedom
Becoming debt-free is a dream for many—but even just reducing debt can do wonders for both your finances and your confidence. Take control by learning some tips on how to get out of debt.
Get out of debt tips:
List your debt
When figuring out how to get out of debt, start with a list of all your outstanding balances, from smallest to biggest. Note what the interest rate is for each—the higher the rate, the more you’re paying in interest each month on that balance.
The “snowball” strategy
Do you like celebrating the small wins in life? With this popular debt payoff strategy, you can do just that. By paying off your smallest balances first, you create a “snowball effect.” This can help you build momentum and free up more cash for tackling bigger balances.
The “avalanche” strategy
Tackle your big debts first with this payoff strategy. Throw however much you can comfortably manage at the debt that’s costing you the most—typically the balance with the highest interest rate. It may save you more in the long run, but you may not free up cash flow as quickly.
Have multiple outstanding debts that are challenging to manage? Consolidating with a new loan or line of credit lets you combine several loans into a single balance with a new interest rate. If the circumstances are right, it could lower your monthly payments and save you money over time.
Pay more—pay less
No matter your payoff strategy, make more than the minimum payments. This will save you hundreds, or even thousands (depending on the size of the loan), on interest over the life of a loan. Our debt versus savings calculator below can help you see how much you could save with extra payments.
Shift your mindset
Carrying debt can be stressful. But sometimes it helps to focus on the good things you’ve gained from it, like getting an education, starting a business, or buying a home. This type of mindset can help you feel more confident and at ease. And don’t feel like you have to stick to a strategy that isn’t working for you anymore—adjusting your strategy can be a good thing, as long as you’re paying down debt and using your credit responsibly.
This content does not constitute legal, tax, accounting, financial, or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial, or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.
Debt versus savings calculator
This calculator is made available by one or more third party service providers. It is not intended to be an advertisement for a product or service at any of the terms used herein. It is not intended to offer any tax, legal, financial or investment advice. All examples are hypothetical and are for illustrative purposes. Truist Financial Corporation ("Truist") and its affiliates do not provide legal or tax advice. Truist cannot guarantee that the information provided is accurate, complete, or timely. Federal and state laws and regulations are complex and are subject to change. Changes in such laws and regulations may have a material impact on pre- and/or after-tax investment results. Truist makes no warranties with regard to this calculator or the results obtained by its use. Truist disclaims any liability arising out of your use of, or any tax position taken in reliance on, this calculator. Always consult an attorney or tax professional regarding your specific legal or tax situation.
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Looking to consolidate or transfer a higher-rate balance? The Truist Future credit cardDisclosure 1 can be a great tool for saving on interest and combining multiple non-Truist balances in one place.