Debt can feel overwhelming, but with the right strategies and mindset, you can take control of your finances and get out of debt faster than you might think. Whether you’re trying to pay off holiday debt, student loan debt or credit card det, here’s a guide to help you accelerate your journey toward financial freedom.

Assess Your Financial Situation

Start by taking an honest look at your finances. List all your debts, including the creditor’s name, outstanding balance, interest rate, and minimum monthly payment. Also make a list of all your sources of income. This will help you identify the total amount of debt you owe and help you prioritize which debts you want to tackle first.

As a Partner Colorado member, you can organize all your finances with our money-management tool, My Financial Partner. You can track your spending to see where your money goes by looking at an overview of your expenses compared to your income.

Create a Realistic Budget

A budget is your roadmap to financial success. Once you’ve tracked your income and expenses to see where your money is coming and going, next try to cut any unnecessary expenses and try to pay off as much debt as possible. Free budgeting tools and apps can make this process easier. You can use My Financial Partner to create a monthly budget and create specific limits for various categories, such as groceries, gas, entertainment and more.

Choose a Debt Payoff Strategy

There are two popular methods for paying off debt. One is known as the snowball method and one is known as the avalanche method. Here’s how each method works.

Debt Snowball Method: Focus on paying off the smallest debts first, while making minimum payments on the others. This approach gives you quick wins, building motivation as you progress.

Debt Avalanche Method: Focus on paying off debts with the highest interest rates first, which saves you more money in the long run. This method is ideal if you’re disciplined and focused on minimizing costs.

Pick the strategy that aligns with your goals and most importantly, stick to it.

Increase Your Income

Earning extra income can significantly accelerate your debt repayment. Consider taking on a side job, freelancing, selling unused items, or negotiating a raise at your current job. Apply any additional earnings directly to your debt.

Negotiate with Creditors

Reach out to your creditors to discuss your options. You may be able to negotiate lower interest rates, reduced monthly payments, or even settle for a lump sum payment that’s less than what you owe. Be proactive and explain your situation honestly.

Avoid Taking on New Debt

It’s crucial to stop accumulating new debt while paying off existing debt. Avoid using credit cards, take only essential loans, and focus on living within your means. Consider switching to a cash-only system to limit spending.

Use Unexpected Income Wisely

If you receive unexpected money, such as a tax refund, bonus, or inheritance, use it to pay down your debt. Applying this type of income directly to your balances can significantly reduce repayment times.

Automate Payments

Set up automatic payments for your debts to ensure you never miss a due date. This prevents late fees and helps you stay consistent in reducing your balances.

Track Your Progress

Regularly review your debt repayment progress. Celebrate small victories, such as paying off a loan, to stay motivated. Keeping track of milestones will remind you how far you’ve come.

Seek Help if Needed

If your debt feels unmanageable, consider consulting a financial advisor or credit counselor. They can provide tailored advice and help you create a plan that works for your situation.

Our Partners in Financial Wellness program gives our members assistance with different aspects of their finances including debt counseling, debt management, credit report review and financial education.

Getting out of debt requires commitment, patience, and strategic planning. By following these steps, you can regain control of your finances and work toward a future free of debt. Remember, the effort you invest now will pay off with financial freedom and peace of mind in the long run.