3 Ways to Pay Down Your Debt Faster

When we think about lottery winners, we likely imagine new cars and mega-mansions. But according to a recent survey conducted by the National Foundation for Credit Counseling® (NFCC®), most of us would actually use our lottery winnings to pay down our debt.

Among the 1,729 people who took part in this online poll, 87 percent indicated that they would use their winnings to become debt-free. Conversely, only 8 percent would use the funds to invest and grow savings before considering other priorities.

Since most of us will never win it big, the NFCC offers the following tips for paying down debt:

• Rethink the approach toward debt management. When progress is slow on the road to being debt-free, consider increasing monthly payments to make faster progress. Additionally, consider prioritizing all extra payments to the accounts that are charging the highest interest rates. Even the slightest adjustments can make a big difference.

• Pay yourself first. Contributing to a personal savings account and 401(k) before turning attention to other expenses will help keep important financial goals in sight, and will maintain steady progress toward reaching them.

• Declutter the debt. If dealing with more than a few accounts, it helps to merge them into a single loan or credit card with one payment. This is called debt consolidation, which works best when resulting in lower interest and fees.