Tackle Down Debt

Total U.S. household debt reached a staggering $17.94 trillion by the end of 2024, according to the Federal Reserve Bank of New York¹. That’s an average debt of $104,215 per person (including mortgages)².

Debt can feel overwhelming, but with a clear strategy and some discipline, you can regain control of your finances. Whether you’re dealing with high-interest credit card balances or large student loans, tackling debt starts with the right plan. In this article, we’ll talk about two common techniques to help you get started.

Take Stock of Your Debt

Before you can effectively manage your debt, you need a full picture of your financial obligations. List out all your debts, including:

• The amount owed
• Interest rates
• Minimum monthly payments

This step is essential because it allows you to see where your money is going and identify which debt you should address first.

Choose a Repayment Strategy

Depending on your financial situation and personality, there are two popular methods for tackling debt:

1. The Avalanche Technique

This method focuses on minimizing the amount of interest you’ll pay over time. Here’s how it works: Start by paying off the debt with the highest interest rate first, while making minimum payments on the others. Once you’ve paid off the debt with the highest interest rate, move on to the one with the next highest rate, and keep repeating this process.

This strategy is ideal for people motivated by long-term savings. Bill Newburn, Southside Bank’s Wealth Management & Trust President, recommends prioritizing any debt with an interest rate above 6%. High-interest debts—like credit cards—can add up quickly, so this method helps you cut down on unnecessary costs.

2. The Snowball Technique

For those who thrive on seeing quick wins, the snowball method might be a better fit. Here’s how it works: Start by paying off your smallest debt balance first, while making minimum payments on the others. Once the smallest balance is eliminated, move on to the next smallest, and so forth.

This approach builds momentum, giving you a psychological boost as you cross debts off your list. “These small victories keep you motivated to continue,” explains Emily Corbett, Southside Bank Market President, Wealth Management & Trust, SETX.

Stick to Your Plan

Whichever method you choose, consistency is key. Consider automating your payments to stay on track and avoid late fees.

Conclusion

By following a structured plan like the avalanche or snowball method, you can reduce your financial stress and start building a more secure future. At Southside Bank, we’re here to support you on your financial journey. Contact us today for personalized advice to help you tackle debt and achieve your financial goals.

¹ Federal Reserve Bank of New York, Quarterly Report on Household Debt, https://www.newyorkfed.org/medialibrary/interactives/householdcredit/data/pdf/HHDC_2024Q3

² Business Insider, Average American Debt Levels in 2024, https://www.businessinsider.com/personal-finance/credit-score/average-american-debt

The information provided in this article is for general informational purposes only and should not be construed as financial advice. Before making any financial decisions, it is strongly recommended that you consult with a certified financial planner™, attorney, accountant, or another trusted financial professional to assess your individual circumstances.

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