The ACS Method For Reducing Personal Debt
Getting out of debt may seem impossible at times. It may be tough, but it’s not impossible if you know what you owe and what you can do to repay it. There is a saying “when the student is ready, the teacher will appear.”
If you want to get serious about working on your debt, check out these beginning steps below.
#1: Understand how to reduce your debt
There are two basic tactics that can help you reduce debt: the highest interest rate method and the
snowball method. Let’s examine both.
The Highest Interest Rate Method
This approach focuses on your debts like credit card and student loan debts with the highest rate of
interest. The goal is to pay off the highest interest rate debt as quickly as possible because it’s costing
you the most. While it may not feel like you’re making progress, this method will help you eliminate your
costliest debts first—which can save you money in the long run.
The downside of this tactic is in human psychology. When we start a new….anything…getting quick wins and building momentum gets us excited. When you don’t see much or any progress, it can derail people pretty quickly as they get frustrated and give up. That’s why we like the next method, even though it’s less “correct.”
The Snowball “Dave Ramsey” method
This approach focuses on your smallest debts first, as soon as possible. And I mean TODAY if you can. You keep on
making the minimum payments on all of your debts, and you put any extra funds you have toward paying
off the smallest debt. This will help you pay it off sooner. Once you’ve paid one smaller debt in full,
dedicate that freed up money to the next smallest debt. This way, you create a “snowball” of payments
as you eliminate each debt.
As opposed to the higher interest rate method, you’ll see progress quickly with this tactic as you pay off smaller debts. This gives you a quick pump as you cross debts off your list, and builds momentum. This gets you excited about something as pedestrian as debt reduction. If they offered a class in this in school, no one would take it, or at least sleep through it. That’d why we like the Snoball method for most normal folks. It keeps you engaged in the process, which is KEY.
#2: Organize your monthly bills
You can use a bill calendar to keep all your information in one place as you tackle your debt. Use the bill calendar to see all your bills and plan when they’re due. Keeping track of your monthly expenses can help put you one step closer to reaching your goals. They make smartphone apps for this too. Use them. We do. So should you.
If you’d like to get started on your debt reduction and credit repair journey, contact us at Ascension Credit Services today. Our Dallas office is currently located off 75 and Walnut Hill. Our credit repair experts will take a look at your case and be able to help you in the right direction today!
