5 Tips for Lowering Your Debt in the New Year

It’s easy to roll your eyes at the idea of a New Year’s resolution. But here’s a statistic that might make you think twice: The average American household’s credit card debt is over $9,000. If you carry a similar balance, you might be piling on $1800 in interest! Student loans, payday loans, and other high-interest loans can be even more challenging to pay off. 

That’s why tackling your debt is a great goal to strive for in the coming year. If you resolve to offload your debt in 2023, stick around for our five most helpful tips and tools.

1. Create a Goal

Start creating your financial strategy by asking yourself, “Why specifically am I trying to lower my debt?”. For example, you may want to repay $10,000 in student loans this year. Perhaps, you’re more results-based—you want to eliminate your car loan, so there is money for a vacation this year. 

Achieve your savings goals with a digital tool like Payactiv. The Payactiv Visa Card* comes with an innovative savings tool that calculates how much is safe to save from each paycheck, so you don’t need to worry about number crunching on your own. Set as much money as you like, set aside on payday, and watch your saving goals steadily grow.

2. Prioritize Your Debt 

Not all debts are the same. Some debts, like credit card debt, have higher interest rates that cause the amount owed to skyrocket over time. This type of debt can be devastating if allowed to accrue for a long time. Interest, the cost of borrowing money, is how debt can accumulate quickly, so the faster you pay down the high-interest-earning debt, the quicker you can become debt free. 

Consider paying off the debt with the highest interest rate first. Write a list of all your debts, then determine the debt and interest rate amount. Pay off each debt from the highest to lowest interest rates to pay off your overall debt quickly. 

3. Think About Areas You Can Cut

You may have expenses you could eliminate and reallocate the extra money to pay off debt. Seemingly small costs like streaming subscriptions and food delivery services may not seem like much, but they add up over the long run. Make meal plans to save on groceries and use coupons from apps like Payactiv for prescription medicines and movie tickets. 

The goal is to take an analytic view of your spending habits and trim the excess in the short term while focusing on your debt repayment plan. Always budget for treats and activities that make life enjoyable.

4. Increase Your Income 

If your current salary isn’t cutting it, you might want to consider a side hustle. Try taking a job as a driver for a ride-sharing app if you enjoy meeting new people. Turn your craft-making hobby into an income stream by utilizing an online marketplace to sell your goods. Use your extra income to pay off your debts.

Looking for a job that offers more flexibility? Earned Wage Access is an employee wellness benefit that lets you get paid daily, weekly, or whenever you want. Search, save, and apply for jobs that offer Earned Wage Access in the free Payactiv app¹. 

5. Curb the Swiping

The last thing you want to do when paying off debt is to get into more debt through credit card purchases you can’t afford. To prevent yourself from the temptation of buying things, skip the credit cards and opt for a reliable debit or prepaid card. 

Paying with thePayactiv Card is like paying with cash. It is a prepaid card that is safe, secure, holds up to $10,000, and has many free financial wellness features. Importantly, it gives you a birds-eye view into your spending and upcoming bills so that you can have more control over your finances. 

The Final Word 

Paying off debt takes time. Keep the strategy you have for paying down your debt realistic. Resolving to put everything you save towards paying off your debt will be hard to stick to, but all-or-nothing thinking can cause you to give up on your resolution altogether. 

So check out the Payactiv’s all-in-one digital wallet to help achieve your debt-lowering resolutions today! 

*The Payactiv Visa Prepaid Card is issued by Central Bank of Kansas City, Member FDIC, pursuant to a license from Visa U.S.A. Inc. Certain fees, terms, and conditions are associated with the approval, maintenance, and use of the Card. You should consult your Cardholder Agreement and the Fee Schedule at payactiv.com/card411. If you have questions regarding the Card or such fees, terms, and conditions, you can contact us toll free at 1 (877) 747-5862, 24 hours a day, 7 days a week.

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