The year 2020 has been one of the toughest years we can remember—not only because of the novel coronavirus, but also because the economy is left in shambles. As we come to the end of 2020 and to the start of a fresh year, it’s beneficial we take a personal financial inventory, including addressing unwanted and stressful debt.
Here are four helpful tips to successfully pay off your debt in 2021:
1. Find accountability. It helps to have someone keep you accountable. Someone you trust—like your accountant or best friend. From my experience, those who are accountable to someone else are more apt to be successful in their long-term goals.
2. Pay down loans - If you’re in debt and wondering how to climb out of the debt pile, I recommend you start by taking an inventory of all loans—write down all of the various credit cards and loans, then rank them from the lowest balance to the highest balance.
After reviewing and fine-tuning your budget, you’ll want to designate extra money and apply it to the lowest balance owed. By paying off the lowest balance first, it will free up those extra payments, consequently allowing the payment you were making on the first loan to be applied to the second-lowest balance.
Repeat this to the third-lowest balance, and continue until all loans are paid in full. This method is called the “snowball method,” and it’s been used by numerous people successfully over the years to get out of debt much sooner.
3. Don’t get discouraged. If you’re having trouble staying on-track, do the best you can, and get back on track as soon as possible. Don’t let one setback derail you from your financial ambitions!
4. Fight the temptation. Stay away from the temptation to pile on more debt once you free up some cash flow. Avoid spending extra funds on other “things." Involve your family—get everybody on board to celebrate even your smallest successes.
We can end 2020 on a good note by developing a debt reduction plan. It can go a long way in turning a challenging year to a hopeful one...one that can lay the foundation for a better year ahead and the years to come.
For more information, visit or call Womack Investment Advisers at womackadvisers.com or (405) 340-1717