How to pay off six-figure debt?

Brad Barrett discusses several strategies for paying off six-figure debt on the ChooseFI. Here are some key points:

1. Understand Debts: List all debts, including types, amounts owed, and interest rates. This helps create a clear financial picture 1.

2. Debt Repayment Methods:

   • Debt Snowball: Pay off the smallest balances first to gain quick wins and build momentum.
   • Debt Avalanche: Focus on the highest interest rates first to minimize interest payments.
   • Hybrid Approach: Combine both methods based on personal preference and motivation 2 3.

     Debt Payoff Strategies

     Brad Barrett

     Jonathan Mendosa

     Jonathan and Brad discuss the importance of understanding interest rates and the amount of debt owed when creating a debt payoff strategy. They introduce three methods: the debt snowball, the debt avalanche, and a hybrid approach, but emphasize that there is no one-size-fits-all solution. It's crucial to find a method that works for your life.

     

     ChooseFI

     115R | How to Get Out of Debt

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3. Discipline and Sacrifice:

   • Stick strictly to a repayment plan.
   • Avoid accumulating more debt and cut unnecessary expenses.
   • Use any extra funds (e.g., tax returns) to pay down debt faster 4 5.

4. Continued Investment:

   • Continue investing in retirement accounts even while paying off debt.
   • Balance debt repayment with growth for long-term financial stability 5.

5. Emergency Fund:

   • First, build an emergency fund to avoid additional debt in unexpected situations.
   • Budget essential expenses and include small allowances for essentials like entertainment to avoid burnout 4.

Key to success is choosing the strategy that best fits your lifestyle and maintaining a disciplined approach without adding new debt 1.