Personal Finance

Debt Management: How to Get Started With Debt Stacking

debt management debt stacking

With the rise of inflation, debt is becoming more common to help make ends meet. However, it still remains a heavy source of stress and relationship challenges. Making proper management crucial for our well-being. 

To effectively reduce debt, it’s necessary to pay not only the minimum amount but also allocate extra funds to gradually pay off the principal. Merely making the minimum payment just covers the accrued interest, leaving the principal largely untouched. 

Financial advisors have developed various debt reduction strategies to help create financial freedom. One of the most effective ones that has gained popularity is debt stacking.

What Is Debt Stacking?

Debt stacking, also known as the debt avalanche method, is a debt reduction method that focuses on paying off debts with the highest interest first. While the debt snowball method prioritizes the smallest debts regardless of interest rates, debt stacking aims to minimize the overall interest paid. This strategy allows you to become debt-free faster and more affordably. 

So, why is debt stacking considered a great method for debt management? The answer lies in its ability to save money in the long run. By prioritizing high-interest debts, you can significantly reduce the total interest paid over the life of your debts. This approach not only accelerates the debt reduction process but also ensures that more of each payment made goes toward the principal amount.

While debt stacking offers numerous advantages, it’s essential to consider both the pros and cons before committing to this approach. The biggest advantage of debt stacking is that it minimizes the total interest paid, resulting in significant long-term savings. Prioritizing high-interest debts leads to a quicker overall debt reduction. Also, following the debt stacking plan helps you to develop financial discipline and a commitment to debt repayment.

However, debt stacking isn’t suitable for everyone. For example, if you have smaller debts, you might find it more motivating to pay off smaller balances first.

Successfully using debt stacking requires discipline and consistency in allocating extra funds for debt repayment. The key to paying off debt is your mindset, and the snowball method provides quick wins that keep you motivated in your debt repayment journey.

How Does Debt Stacking Work?

The debt avalanche method involves the following steps:

  1. List Your Debts: Start by compiling a comprehensive list of all your debts, including outstanding balances and interest rates
  2. Order Debts by Interest Rate: Arrange your debts in descending order based on their interest rates, with the highest interest rate at the top
  3. Pay Minimums on All Debts: Ensure you make the minimum payments on all debts to maintain a positive credit history
  4. Allocate Extra Payments: Allocate any extra funds to the debt with the highest interest rate while continuing to pay the minimum on other debts
  5. Repeat the Process: Once you pay off the highest-interest debt, redirect the extra payments to the next highest-interest debt

This systematic approach accelerates your debt reduction process and minimizes the overall interest you will pay over time. If you’re looking to get started with this method but need help, check out debt relief Tyler, Texas for more assistance.

Easy Ways to Start Debt Stacking

Starting your journey of debt stacking requires a commitment to finding extra funds for debt repayment. Here are some practical ways to free up money in your budget:

Trim Your Expenses

Review your monthly expenses and identify areas where you can cut back. This might involve cooking at home more often, canceling unused subscriptions, or finding more cost-effective alternatives for your regular purchases. Set boundaries with yourself and loved ones to spend money only on essential expenses. 

Negotiate Lower Rates

Contact your service providers, such as your landlord, internet, or insurance companies, and negotiate lower rates. Many companies are willing to come up with lower payment agreements for customers facing financial challenges.

Start by looking at your current interest rates, outstanding balance, and payment history. This information is crucial when negotiating. Next, research current rates for similar loans or credit cards. Having this information helps in making a case for why your rate should be reduced.

Remember, negotiating takes time and persistence. If your initial attempt doesn’t work, don’t be discouraged. Try again or explore other options after some time.

Increase Your Income

Consider asking for a pay raise at your current job or exploring side hustles to supplement your income. Every additional dollar you earn must be directed toward debt reduction.

By implementing these strategies, you can create a more substantial pool of funds for debt repayment, accelerating your journey toward financial freedom.

Building a Strong Foundation With an Emergency Fund

Before diving headfirst into debt stacking, it’s crucial to establish a solid financial foundation. Start by saving up a three-month emergency fund. This fund acts as a safety net, providing a financial cushion in case of unexpected expenses. Without this buffer, you risk deviating from your debt repayment efforts when emergencies arise.

Imagine diligently following your debt-stacking plan, only to face an unforeseen medical expense or car repair. Without an emergency fund, these situations can throw your budget into disarray and make it difficult to regain momentum in your debt repayment routine.

Beyond Debt Stacking: Exploring Other Debt Relief Options

As you pay off debts and your credit ratings improve, you should renegotiate interest rates on your remaining debts or consider debt consolidation. With lower interest rates, you can further expedite the debt repayment process. Additionally, debt consolidation can simplify repayment by combining multiple debts into a single, more manageable payment with lower interest rates. 

Professional Support for Getting Out of Debt Faster

Debt stacking is an effective and cost-efficient strategy for managing and paying off debt. It allows you to prioritize paying off high-interest debts, ultimately paving the way toward financial freedom.

But it’s crucial to approach debt stacking with discipline, otherwise, you won’t achieve your debt repayment goals. Carefully weigh the pros and cons, and establish an emergency fund before using the strategy. As your debt repayment journey progresses, leverage improved credit ratings to your advantage and consider exploring other debt-relief options with the guidance of experienced debt advisors.

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I'm Ved Prakash, Founder & Editor @Newsblare Media, specialised in Business and Finance niches who writes content for reputed publication such as,, Motley Fool Singapore, etc. I'm the contributor of different... news sites that have widened my views on the current happenings in the world.

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