How to pay down debt quicker in 2024

| | 2 min read

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Debt can feel like a heavy burden that weighs you down, limiting your financial freedom and causing stress. If you find yourself grappling with debt, you're not alone. Many people face this challenge at some point in their lives. The good news is that there are strategies to pay off debt and potentially pave the way to financial freedom.

An Equip financial planner can help you take a broader view of your finances and the opportunities to pay down and consolidate debt quicker. But you can take the first steps with these useful tips. 

Assess Your Debt

Make a list of all your debts, including credit cards, personal loans, car loans, and mortgages. For each debt, note down the outstanding balance, interest rate, and minimum monthly payment. This will give you a clear picture of your financial situation.

Create a Budget

A budget is your roadmap to managing your finances effectively. It helps you track your income and expenses, identify areas where you can cut back, and allocate funds towards debt repayment. Be realistic and thorough when creating your budget, accounting for all your regular expenses and any irregular ones that may pop up.

Prioritize High-Interest Debt

Not all debt is created equal. Some debts carry higher interest rates than others. Start by prioritising high-interest debts, such as credit card balances, as they cost you more in the long run. Allocate extra funds from your budget to pay down these high-interest debts while making minimum or reduced payments on lower-interest debts.

Consider Debt Consolidation

If you have several high-interest debts, you may want to consider debt consolidation options. This involves taking out a single loan at a lower interest rate to pay off all your high-interest debts. It simplifies your debt repayment and can save you money on interest. Be sure to compare loan offers and terms to find the best option for your situation.

Snowball or Avalanche Method

Two popular debt repayment strategies are the snowball and avalanche methods. With the snowball method, you focus on paying off the smallest debt first while making minimum repayments on others. Once the smallest debt is paid off, you move to the next smallest, and so on. This method provides a psychological boost as you see quick wins.

The avalanche method targets the highest interest debt first. You allocate extra funds to pay off the debt with the highest interest rate while making minimum payments on the others. This method can minimise the total interest you'll pay over time. 

Build an Emergency Fund

While it may seem counterintuitive to save money while in debt, having an emergency fund is essential. It prevents you from relying on credit cards or taking on more debt when unexpected expenses arise. Aim to save at least three to six months' worth of living expenses in your emergency fund. 

Seek Professional Advice

Paying off debt and achieving financial freedom is a journey that requires commitment and discipline. Stay focused on your goals, track your progress, and celebrate your milestones along the way. Remember that setbacks can happen, but with determination, you can overcome them.

A financial planner can help make the journey easier by highlighting risks and opportunities that you may not be aware of. They can also help you understand how your current finances fit into the bigger picture, including other assets like superannuation and property. The good news is an initial appointment is obligation free and available at no additional cost to Equip fund members.

Issued by Togethr Trustees Pty Ltd ABN 64 006 964 049, AFSL 246383 ("Togethr"), the trustee of Equipsuper ABN 33 813 823 017 ("the Fund"). The information contained herein is general advice and information only and does not take into account your personal financial situation or needs. You should consider whether this information is appropriate to your personal circumstances before acting on it and, if necessary, you should also seek professional financial advice. Where tax information is included, you should consider obtaining personal taxation advice. Before making a decision to invest in the Fund, you should read the Product Disclosure Statement (PDS) and Target Market Determination (TMD) for the product which are available at Financial advice services may be provided to members by Togethr Financial Planning Pty Ltd (ABN 84 124 491 078; AFSL 455010), a related entity of Togethr.