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When addressing debt, psychological strategies can be just as impactful as logical ones. Instead of focusing solely on tackling the highest-interest debt first, consider paying off smaller debts first to create a sense of accomplishment and momentum. This approach builds confidence and reinforces positive financial behaviors.
It’s recommended to prioritize consumer debt repayment (like credit cards) while keeping larger debts, like mortgages, in perspective.
Lifestyle Adjustments
Adjusting one’s lifestyle can have a significant effect on overall financial health. Consider downsizing expenses, whether that involves trading down to a less expensive car or reevaluating living arrangements. The hidden costs of convenience, such as leasing a vehicle, should also be scrutinized.