Paying off your debt is a liberating feeling. If your New Year’s resolution is to become debt-free, consider using one of these debt payoff strategies to achieve your goal.Crane Investment Services Logo

The snowball payoff method involves paying off your smallest balance first. Start by paying the minimum on all but the smallest balance on which you pay as much as you can afford until it’s paid in full. Then roll that amount into the next debt on your list.

The avalanche method is is similar to the snowball method but has a different focus. The goal is to pay the least amount of interest. Whereas the snowball method doesn’t consider interest rates when prioritizing debts, the avalanche method works to pay off the debt with the highest rate first. Make your list of debts and include the interest rates for each one. You’ll use the same payment strategy as with the snowball method, except you’ll pay off debt with the highest interest rate first.

Debt consolidation works to combine multiple debts into one. Generally, debt consolidation aims to reduce your monthly payment and may or may not decrease your interest rate. If you’re considering debt consolidation, be sure to calculate the total interest you’ll pay under the new loan versus the old rate.

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Casey Madsen
Financial Planner

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*Crane Investment Services Advisors are registered representatives of CUNA Brokerage Services, Inc. Representatives are registered, securities sold, advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor, which is not an affiliate of the credit union. CBSI is under contract with the financial institution to make securities available to members. Not NCUA/NCUSIF/FDIC insured, May Lose Value, No Financial Institution Guarantee. Not a deposit of any financial institution. CUNA Brokerage Services, Inc. is a registered broker/dealer in all fifty States of the United States of America.