{"id":35829,"date":"2025-09-19T11:57:43","date_gmt":"2025-09-19T11:57:43","guid":{"rendered":"https:\/\/financialrush.com\/?p=35829"},"modified":"2025-09-19T11:57:43","modified_gmt":"2025-09-19T11:57:43","slug":"smart-ways-to-pay-down-debt","status":"publish","type":"post","link":"https:\/\/financialrush.com\/?p=35829","title":{"rendered":"Smart ways to pay down debt"},"content":{"rendered":"

\n<\/p>\n

<\/p>\n
\n
\n
\n

Travelism | E+ | Getty Images<\/p>\n<\/div>\n<\/div>\n<\/div>\n

\n

The Federal Reserve cut interest rates<\/a> on Wednesday for the first time this year, providing some relief to consumers facing high borrowing costs on credit cards and other loans. Still, it can be a tough road ahead for many consumers, regardless of their income<\/a>, as they strive to make a dent in their debt payments<\/a>.\u00a0<\/p>\n

To break the cycle of debt, experts say,\u00a0 it helps to understand the conduct that led to the debt.\u00a0<\/p>\n

Often, \u201cit\u2019s tied to emotional spending,\u201d said Jack Howard, head of money wellness at Ally Bank. She said that overspending can stem from either scarcity or abundance, as well as a lack of understanding of one\u2019s own finances.\u00a0<\/p>\n<\/div>\n

\n
\n
\n
\n

More from Your Money:<\/h2>\n
\n

Here\u2019s a look at more stories on how to manage, grow and protect your money for the years ahead.<\/em><\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n

\n

If you\u2019re struggling to pay down credit card and loan balances, the first step is to understand how much debt you owe and the behaviors that got you there, Howard said.\u00a0<\/p>\n

Once you have a list of your debt and the interest rates on those balances, consider these three strategies to help shrink your debt:<\/p>\n<\/div>\n

1. Find extra cash\u00a0<\/h2>\n
\n
\n
\n

Ridofranz | Istock | Getty Images<\/p>\n<\/div>\n<\/div>\n<\/div>\n

\n

Create a budget<\/a>, understand your monthly income, and track your expenses.\u00a0<\/p>\n

\u201cWhether you are a school teacher, or a firefighter, or an executive working in a consulting firm, 50% of Americans today don\u2019t have a budget,\u201d said Mike Croxson, CEO of the NFCC, an organization of non-profit credit counseling agencies. \u201cHave a budget. Understand what you can afford to pay, what you cannot afford to pay.\u201d<\/p>\n

Be ruthless about cutting out unnecessary expenses. Limit food delivery services and consider low-cost ways to spend time with friends, like volunteering together or going for a hike.\u00a0<\/p>\n

\u201cYou want to have that connection, but it\u2019s often tied to dollars, so thinking of creative ways to still have those experiences without spending a lot of money,\u201d Howard said.<\/p>\n

Use the cash you save by cutting out expenses to pay down debt.<\/p>\n<\/div>\n

2. Reduce credit card balances<\/h2>\n
\n

You can often negotiate a lower interest rate from credit card lenders. Most cardholders \u2014 83% \u2014 who asked for a lower rate in the past year received one, according to a recent LendingTree survey<\/a>.\u00a0<\/p>\n

Pay more than the minimum and automate the payments to ensure they\u2019re made on time<\/a>.<\/p>\n<\/div>\n

\n
\n
\n
\n
<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n
\n

A balance transfer may be a good option if you can pay off the debt within the introductory 0% annual percentage rate offer, which usually lasts from 12 to 21 months.\u00a0You must also pay a balance transfer fee, which is typically 3% to 5%.<\/p>\n

Howard also recommends building your emergency cash reserves so that you\u2019re less likely to use a credit card for unexpected expenses. \u201cInstead of using the credit card, we\u2019re going to that emergency fund to help fill in those gaps,\u201d she said.<\/p>\n<\/div>\n

3. Shave off student loan debt\u00a0<\/h2>\n
\n
\n
\n

Laylabird | E+ | Getty Images<\/p>\n<\/div>\n<\/div>\n<\/div>\n

\n

As the Fed cuts interest rates, borrowers with variable-rate private student loans <\/a>may automatically get a lower interest rate. Federal student loan rates<\/a> are fixed and only reset once a year on July 1, so most borrowers won\u2019t be immediately affected by a rate cut.<\/p>\n

For private and federal loans, making more than the minimum payment can save you money in interest and can be key to reducing the debt, experts say. <\/p>\n

Also consider refinancing<\/a> private loans to a lower rate to make payments more affordable. Experts usually don\u2019t recommend refinancing federal loans into a private student loan, however, because federal loans offer borrowers more protections. <\/p>\n

Although it is more challenging these days, borrowers with federal loans may still be eligible for an income-driven repayment (IDR) plan<\/a>. An IDR plan<\/a> bases your monthly student loan payment amount on your income and family size. For some people, payments on an IDR plan can be as low as $0 per month.\u00a0<\/p>\n

To avoid defaulting on your federal loan payments<\/a>, go to studentaid.gov<\/a> to find a repayment plan that works best for your budget.\u00a0<\/p>\n

Student loan debt \u201ccan be so overwhelming, the amount, that people become paralyzed by it,\u201d Howard said. \u201cShift from feeling paralyzed to understanding the numbers and having an action plan to pay it off.\u201d<\/p>\n

SIGN UP:<\/strong>\u00a0<\/em>Money 101\u00a0<\/em><\/a>is an 8-week learning course on financial freedom, delivered weekly to your inbox. Sign up\u00a0<\/em>here.\u00a0<\/em><\/a>It is also available in\u00a0<\/em>Spanish.<\/em><\/a><\/p>\n<\/div>\n<\/div>\n\n
Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Travelism | E+ | Getty Images The Federal Reserve cut interest rates on Wednesday for the first time…\n","protected":false},"author":3,"featured_media":35830,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[],"class_list":["post-35829","post","type-post","status-publish","format-standard","has-post-thumbnail","category-investing","cs-entry","cs-video-wrap"],"_links":{"self":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/posts\/35829","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=35829"}],"version-history":[{"count":0,"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/posts\/35829\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/media\/35830"}],"wp:attachment":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=35829"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=35829"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=35829"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}