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The joy of shouting to your friends over the roar of a crowded bar, the giddiness of seeing the world rushing by below you from the seat of an airplane, the weirdly constricting sensation of wearing pants that aren’t elastic — the summer of 2021 brought back many experiences we had forgone during the past year and a half of the pandemic.
But this push to re-create a world that felt something like “normal” may have brought back another familiar feeling: the anxiety of racking up debt.
If your summer of “revenge” spending has come for a payback of its own in the form of lingering debt, make a plan for paying it off. Then, think about how to prevent yourself from getting into more debt as you navigate progress and setbacks on the path to normalcy.
Take stock of your debt — and find your payoff path
Whether you’re back to spending most of your time at home or killing time at an airport terminal before a flight, find time to sort out your debt and pick a payoff strategy.
First, understand exactly how much you owe and to whom. If you don’t know all the details, certified financial planner Pamela Rodriguez in Sacramento, California, suggests pulling your credit reports, which you can do for free.
“Pulling your credit report is probably the fastest way to know what you owe because there’s no hiding from your credit report,” Rodriguez says.
Using a spreadsheet, pencil and paper, or a debt payoff app, list your debts. Include the balance, interest rate and monthly minimum payment for each. Be sure to account for all forms of debt, like buy now, pay later loans.
Then, dig into your income and expenses to see how much money you can put toward debt and where you can cut spending. If you’re spending more on dining out than you were six months ago, for example, try cutting back on that to free up cash for debt payoff.
Next, pick a strategy for paying it off. Here are a few common tactics:
Debt snowball: With the debt snowball, you channel your debt payoff energy toward the smallest balance first while making minimum payments on the rest. Once the smallest debt is knocked out, roll the amount you were paying on it to the next smallest debt. As you wipe out more debts, the payment amount keeps growing like a snowball until you’re debt-free.
Debt avalanche: With this method, you pay off the debt with the highest interest rate first. Then, similar to the debt snowball method, once that is paid off, you cascade the payment onto your debt with the next highest interest rate.
Balance transfer credit card: If your credit score is high enough to qualify for one, a credit card with a 0% APR promotional period can help you pay off debt faster and cheaper than keeping it on the original credit card. Be sure to wipe out the balance before the 0% promotional period ends to avoid paying interest.
No matter which payoff path you choose, it’s important to decide on one and commit. Waffling between a few different options can cost you time and money as debts continue to accrue interest.
“People have decision overload when figuring out how to pay off their debt,” says Thomas Nitzsche, financial educator at the nonprofit credit counseling agency Money Management International. “Just come to terms with the fact that you’re going to have to do something and figure out a way to overcome that emotional barrier.”
If you don’t see a way to pay more than the minimums on your debts monthly, think about calling a nonprofit credit counseling agency for free budgeting and debt help.
Know your spending habits and triggers
If your summer debt was the result of revenge spending, dig into the triggers that led you to overspending so you can avoid sliding back into debt in the future.
For many, that may have been the opportunity to experience something that they were deprived of during the first year of the pandemic.
While travel and eating at restaurants may be safer for those who are vaccinated, these activities can wear down your budget. Rodriguez suggests finding more-affordable ways to enjoy activities you’re seeking.
“If you can think of the one thing you were deprived of, find a smaller scale of that,” Rodriguez says. “So a smaller scale of travel would be going on a local adventure, and that is so much more manageable financially.”
The path forward in the pandemic seems likely to have a number of starts and stops, with accompanying opportunities to either spend or save money. Take advantage of moments where you can pull back your spending and direct more cash toward your debt. Having manageable debt — or no debt at all — equips you with more options whenever the world is ready to fully reopen.
This article was written by NerdWallet and was originally published by The Associated Press.