October 12 is National Savings Day in the US, which is confusing since World Savings Day is on October 30.🤷‍♀️ Since we will likely forget about it on the 30th, busy with Halloween, let's use the occasion today to improve our financial habits.

We don't want to give you the obvious boring tips, like "save a certain percent of your income each month, create safety savings account for 3-5 months, etc". Instead, we will talk about debt management strategies. Because the less you owe, the more you can save! (and spend 😎, but this is not the topic for today). Today we will focus on eliminating loans. It is so easy for us to wake up one day with several of those hanging over our heads. First, you overspend on your credit card for a few months. Then you get a new car with attractive credit terms, and don't forget about the mortgage or a small loan you took before the last vacation...

Methods to get rid of debt:

  1. Avalanche. Focus on eliminating your highest-interest debt while making the minimum monthly payments on your other debts. Once this debt is paid off, you move to the debt with the next highest interest rate. The advantage of this method is that saving a lot of money that you would have to pay as interest. It may take a while to see progress if your highest-interest debt has the highest balance. So, some people find it challenging to stick to the strategy and prefer the next approach.👇

  2. Snowball. Tackle the smallest debt first, followed by the next smallest debt, and so on. Choosing this strategy will feel more rewarding since it’s easy to close the smallest debts. But mind that it may cause you to pay more interest than the first method.

  3. Snowflake. Group small amounts of money toward paying off your debts. This strategy may take a long time to close all the loans. But if you are in no hurry, it is a good method to relieve the pressure of finding a big amount of cash.

Choose the method which works best based on your unique debt situation and goals. You can combine them to achieve financial freedom and safety in no time.

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