Having debt going into the new year can feel like a weight around your neck. Rather than looking forward to a season of growth and personal change, you have to deal with payments slowing you down.

If one of your resolutions is to become debt free in 2022, we want to help make it happen. We’ve got some great ideas and tools to lessen and eventually eliminate your debt.
 

Meet with a Financial Counselor

Debt can be a messy and overwhelming thing to deal with, especially if you have multiple debts draining your money every month. You might feel like there is no good place to start and just fall back to paying all the debts at once.

If you are looking to eliminate your debt, you should meet with a financial counselor. They can help you gather up all of your information and make a plan of attack for your debts. When meeting with a financial counselor, you’ll need to bring your paystubs and recent bills for all of your debts, along with other monthly expenses.

Sitting down with the counselor, they can guide you through creating a plan to tackle your debts and keep up with your other bills. 

Pioneer members get free access to a financial counselor through GreenPath Financial Wellness. With well-trained counselors, they can help set you up for success in all of your financial goals, not just becoming debt free. Likely, they’ll suggest a mix of the below suggestions for improving your debt situation.
 

Consolidate Your Debts

If you have multiple debts of different types weighing you down, consolidating them can make your life simpler and lower your monthly payments. For people with multiple credit card payments, personal loans, or other debts, this can be a game changer.

Instead of paying three or more debts every month, consolidating brings it to just one monthly bill. Not only does this make life simpler, with only one bill to worry about, but could likely bring your lower minimum payment. 

A major key factor is your interest rate. Many credit cards have very high interest rates, making paying them off after a few months very difficult. But if you consolidate that debt into a single loan, likely you’ll have a much lower interest rate, which can lower your overall monthly payment.

Pioneer offers members a way to consolidate their debts using our Signature Loans. With a low interest rate and ease of payment through myPioneer, it’s a great financial tool to lowering your monthly debt payments.
 

Snowball or Avalanche Payment Methods

There are two popular methods to eliminate debt quickly, the snowball and the avalanche. Depending on your situation and number of debts (and if you consolidated all of your debts in one place), one method might be better than the other.

The first method, snowballing, has you taking all of your debts and organizing them by largest to smallest. Then, you take all of your excess cash and throw all of it at your smallest bill while keeping up on the rest. Once the smallest bill is paid off, you take all of your excess cash and what you paid for that bill and put it to the next smallest bill. You keep this method going, letting the money paid snowball larger and larger till you wipe everything out.

The second method, avalanche, has you getting your debts and organizing them like before. This time though, you take all of your excess cash and throw it at your biggest bill, while keeping up on the rest. This might take a little while to pay it off, but once you eliminate your largest debt, you take that lump sum of money and put it to the next bill, quickly avalanching your remaining debts since the largest is now gone.
 

Put Extra Money to Debts

If you get a large amount of money sometime during the year, like a tax refund, a birthday gift, or some other unexpected cash, put it towards your debts. When you make an extra payment on a debt, or an extra large payment, the extra goes to paying off the principle of the debt. Less principle means your overall interest goes down too.

Along the same idea, if you get a raise or bonus at work, put that extra money towards your debts. The more you can throw at them, the quicker you’ll be debt free!
 

Settle Your Debts

If your debts are overwhelming you, or have reached a point you won’t be able to pay them off, you aren’t out of options. Your lenders are more interested in getting some of their money back than hurting your credit and getting none of it back. 

Reach out to your lenders and ask if they are willing to settle the debt. Many major lenders have a plan in place to settle debts so they can recoup some of their lost money. You might be able to get your total debt significantly lowered to a more manageable monthly bill. Couple that with some repayment methods and you could turn an impossible situation into one easily handled. 
 

Don’t Take on More Debts

If you are working to pay off your current debts, don’t actively make the problem worse with more debt. Avoid taking on more so you can actively work on your current problem. If you have an issue with buying stuff on credit, take steps to make it harder.

If you have open credit cards, see if you can pause them or cancel them. You’ll still have to pay off the balance on your cards, but you won’t add to the balance. Just be sure to keep at least one credit card open to help your credit score. 

Additionally, avoid any major purchases if you can. This could include buying a new home or new car, or buying something expensive. If your main goal is eliminating debt, extra money should be put to the debts, not a new TV or computer. Understandably, some large purchases are unavoidable, but do what you can to save and put extra money to paying off debts.
 

Use a Passive Saving Method for Extra Cash for Payments

Every extra penny to your debts help. The lower the principle, the lower the interest rate charges you. One way to help get some extra cash every month is to find a passive way to save money and stop you from spending it.

One way of doing this is to set up a recurring transfer every time you get paid, to stop you from spending that money. Move the money from your checking account to a specific savings account for paying off your debts. This way, you won’t be tempted to spend that extra $20 on something for yourself and instead put it towards your debts.

Another passive saving method is Pioneer’s ChangeForward savings account. How it works is, everytime you buy something using your Pioneer debit card, the transaction balance gets rounded up to the next dollar and the remaining change gets put into the savings account. For example, you make a purchase for $11.52, the charge gets rounded up to $12 and the remaining 48 cents gets deposited into a savings account. You then can use that extra money towards paying down your debt quicker.

Learn More about ChangeForward Savings Account