Many Making New Year’s Resolution To Pay Down Debt

(KNSI) — As the calendar switches to 2023, many may be making new year’s resolutions.

One common resolution is to save money or pay down debt.

Financial counselor Janelle Engelsrud says many feel overwhelmed or helpless, but there is always hope.

“They want to be able to determine what the best options are to pay off their debt and to save. We can try to see if they’re able to do it on their own.”

Engelsrud says her firm teaches people two methods to tackle debt.

“A debt snowball method is simply a debt reduction strategy in which you’re paying off the smaller debts first. So you’re gonna pay the minimum on those larger amounts and paying more towards the smaller balances.”

Engelsrud says the snowball method helps people feel empowered as they get rid of their smallest debts, gaining momentum. The second is the debt avalanche method, which focuses on paying down the debt with the highest interest rate first.

Interest rates for credit card debt are at all-time highs, coming as balances have jumped sharply. WalletHub says Americans increased their revolving credit by almost $40 billion in the third quarter alone. Many low-income and middle-class Americans turned to credit cards to keep up with inflation, which increased by as much as 9% this past summer.

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