sense of progress than paying the same amount of money towards a larger debt,” says David Gal, professor of marketing at the University of Illinois at Chicago, who has authored research on the topic. But priorities and preferences differ widely. Sam Boyd, a certified financial planner and senior vice president of Capital Asset Management Group, a financial planning firm, says he likes to plug clients’ total debt numbers and interest rates into a calculator so he can quickly see how long it will take them to pay off their debt based on how much they are paying each month.
Some clients want to prioritize paying as little interest as possible, while others are more focused on the number of months it will take them to become debt-free. Talking through those numbers helps them pick between the debt snowball and debt avalanche approaches, he says. “It’s about personal preference,” he adds.
Sometimes, sharing your
goals with friends or family members can make it easier to stay on track.
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HOLD YOURSELF ACCOUNTABLE
Sometimes, sharing your goals with friends or family members can make it easier to stay on track. “If you have a goal and it’s in your head, it’s just an idea, but if someone else hears about it, you have more accountability,” Boyd says.
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FIND EXPENSES TO CUT — BUT DON’T GO TO EXTREMES
In addition to living at home with her parents in Queens, New York, after graduation, Smith — who tweets under the “Bad Girl Finances” handle — also decided to cut her fast-food budget to just $40 a month. “I made sure I ate at home and carried food to school or work or whenever I needed to,” she says. But, Smith says, it’s OK to splurge on some things to avoid burnout. “I would still go to the movies or go out to eat, but just once a month. So I was still happy but also still paying off debt,” she says. “If you only pay off debt and buy nothing else, it can make you feel like you want to give up.”
REWARD YOUR PROGRESS
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Smith recommends taking a moment to congratulate yourself on your progress and celebrate those smaller wins along the way to becoming debt-free.
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