Monday Money Tips 9-29-25 · InvestCEO with Kyle Henris

Monday Money Tips 9-29-25

4 Effective Strategies to Achieve Debt Freedom

The last couple of weeks we talked about investing and the power of compound interest. But keep in mind, compound interest can work FOR you as well as AGAINST you. Before you consider putting investing dollars to work, it's critical to get control of any debt you're carrying. Whether you're dealing with credit card debt, student loans, or other obligations, the key is to choose a strategy that aligns with your financial situation and personality. Below are four proven strategies to help you eliminate debt.

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1. Debt Snowball Method: Build Momentum with Quick Wins

This approach focuses on psychological motivation by tackling smaller debts first, regardless of interest rates. The idea is to gain quick victories to stay motivated.

How it works: List all your debts from smallest to largest balance. Continue making minimum payments on all debts, but throw every extra dollar at the smallest one until it's paid off. Then, roll that payment amount into the next smallest debt, creating a "snowball" effect.

Pros: Boosts morale with early successes, helping you stick to the plan.
Cons: May cost more in interest over time compared to other methods.
Tips for success: Track progress with a visual chart. Aim to free up extra cash by cutting non-essential spending, like dining out or subscriptions.
Who it's best for: People who need emotional encouragement to stay committed.

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2. Debt Avalanche Method: Minimize Interest Costs

This strategy prioritizes high-interest debts to reduce the total amount paid in interest, making it a mathematically efficient choice. High-interest debt like credit cards charging 15%-25% can quickly compound against you and spiral out of control if you don't get ahold of it.

How it works: Rank your debts by interest rate from highest to lowest. Make minimum payments on everything, but allocate extra funds to the highest-interest debt first. Once cleared, move to the next highest, and so on.

Pros: Saves money long-term by eliminating expensive debts quickly.
Cons: Progress might feel slow if your highest-interest debt is also the largest.
Tips for success: Use online calculators to estimate interest savings. Consider balance transfer credit cards with 0% introductory APR to accelerate high-rate payoffs (but watch for fees).
Who it's best for: Analytical individuals focused on long-term savings rather than quick wins.

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3. Debt Consolidation: Simplify and Potentially Lower Rates

This involves combining multiple debts into a single loan or payment, often at a lower interest rate, to streamline repayment and reduce monthly burdens.

How it works: Apply for a consolidation loan (e.g., personal loan or home equity line of credit) or use a debt management program through a credit counseling agency. The new loan pays off existing debts, leaving you with one monthly payment.

Pros: Lowers interest rates (if you qualify for a good deal) and simplifies tracking.
Cons: Requires good credit for favorable terms; otherwise, it could extend repayment time.
Tips for success: Shop around for the best rates from banks, credit unions, or online lenders. Avoid new debt during consolidation to prevent digging a deeper hole.
Who it's best for: Those overwhelmed by multiple payments or with high-interest credit card debt.

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4. Increase Income and Aggressive Budgeting: Boost Your Payoff Power

Pairing expense reduction with income growth creates a powerful one-two punch, allowing you to allocate more toward debt without drastic lifestyle changes.

How it works: Start with a zero-based budget where every dollar is assigned. Cut unnecessary expenses, then seek ways to earn more whether that's with a side hustle, selling unused items, or negotiating a raise.

Pros: Accelerates payoff without relying solely on cuts and builds financial habits for life.

Cons: Requires time and effort to implement income boosts.
Tips for success: Set specific goals, like "earn $500 extra per month via Uber." Automate debt payments to ensure consistency, and review your budget monthly.
Who it's best for: Motivated individuals with stable jobs who can handle side work.

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Remember, debt freedom isn't just about strategies, it's about mindset. Celebrate small milestones along the way!

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Poll Question: Which method has worked best for you in the past?

Snowball Method

Avalanche Method

Consolidation

Increase Income & Budgeting

22 votes

2 comments