Rianka R. Dorsainvil, CFP®
As certified financial planners, Brittney Castro and Rianka Dorsainvil often work with clients who are trying to pay down debt and build wealth. And while every client is different, there are a few universal points when it comes to paying down debt and living debt-free. Here, Castro and Dorsainvil get real on what works for their clients, what doesn’t and how they’ve dealt with debt in their own lives.
TIP 1
The best strategy? One that works.
Spreadsheets and calculations have their place in a debt repayment plan, but the best strategy to tackle debt is the one that works for you. Castro and Dorsainvil suggest that clients try different apps, but tallying up debts, assessing interest rates and coming up with a plan can all be done by putting pen to paper. “As financial planners, we help clients remove barriers to assessing where their debt stands,” says Castro. Working with a professional can help you assess your options, but you can also figure out a strategy based on your goals. These strategies can include putting a certain amount beyond the minimum toward payments to pay off your debt faster, lowering your expenses or increasing your income. But knowing where you stand and setting specific goals can help you.
TIP 2
You have options.
There are several ways to pay down debt. Some people decide to tackle their higher-interest balances directly. They could do this by tackling the balance with the highest interest rate first, a strategy known as the avalanche method. They might tackle the smallest balance first and build from there, a strategy known as the snowball method. Or they might decide to consolidate their debt into an option with lower interest. This could include using a balance transfer on a credit card or utilizing a personal loan.