"I think there is beauty in everything. What 'normal' people perceive as ugly, I can usually see something of beauty in it."—Alexander McQueen

"I think there is beauty in everything. What 'normal' people perceive as ugly, I can usually see something of beauty in it."—Alexander McQueen

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Pointers for Paying Off Debt

There are so many AT&T401k plan investment options you could have if you had a lot of money available. But that might not be possible for you at the moment because of debt. Studies show that 77% of Americans carry some debt, so you are not alone in this. However, how you deal with your debt will determine if you can join the 23% of people who don’t owe money to anyone.

The average American household carries about $137,000 worth of debt. That’s scary. And if you are in a similar position, you might feel overwhelmed with the numbers. But what you need to know is that you can reduce your debt load until you no longer owe anything. Here are the methods you can use to pay off debt:

   1. The debt snowball method

The debt snowball method is a debt repayment strategy that enables you to pay off debt based on amount. So what you need to do is to list down all your debts. Then arrange them in ascending order from the smallest to the biggest. The goal here is to find tiny debt that is manageable right now if you can squeeze yourself a little bit more.

Once you write down your list, pay off the minimum required monthly payment on all your debts. Then find that little bit of extra money and pay off what you can of the smallest debt. Continue to do this until the smallest debt is paid off. Then use that additional payment and what you were paying as the minimum payment for the smallest debt, to pay off the second smallest debt. Lather, rinse, repeat. This creates a snowball effect that enables you to pay off more substantial amounts of debt with every debt you pay off.

While you might end up paying more interest rate using this method, it is the best psychological weapon against discouragement if you have many debts. Because every time you see the debt paid off, you get motivated to attack the next one.

   2. Debt avalanche method

The debt avalanche method is a debt repayment strategy that enables you to pay off your debts based on the interest rate. So what you do is to arrange all your debts in order of interest rates from the highest to lowest interest rate.

After that, you need to pay the minimum monthly payments on all your debts and then direct everything left over to the liability with the highest interest rate. Do this until the debt is fully paid off and then channel all the money you have freed up to the debt with the second-highest interest rate. Lather, rinse, repeat. What this does is create an avalanche as each debt with a high-interest rate comes tumbling down.

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The debt avalanche method is complicated for those who feel discouraged quickly. But it saves the most amount of money in the end. So if you have a logical person with a strong self-drive, this method can work for you.

3. The hybrid method

If you want a little bit of both worlds, you can choose to implement both the debt snowball and debt avalanche methods when paying off your debt. So what you will do is first pay off the smallest debt, then use the money freed up to pay off the debt with the highest interest rate second or vice versa. You can then shift off to the second smallest debt, and then move on to the debt with the second-highest interest rate or vice versa.

You can also order debts in descending order based on interest rates and then pay off the one with the lowest overall balance first. By combining both methods in different ways that work for you, you will end up with the best of both strategies. You stay motivated while reducing the money you pay as interest rate in the long term.

Tackling debt is not an easy process. But it will give you access to more AT&T plan investment options. So sit down and list all your debts. And then determine which debt repayment strategy will work for you best.

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