🌟 Editor's Note
Welcome to another issue of Financial Freedom Insights. This newsletter is full of financial tips, insights, financial news, announcements, a special treat for those who make it to the bottom, and more!
🤖 AI Note
NONE of this newsletter was written using AI. It was written by humans for humans.
Table of Contents
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💸 Your 10 Second Financial Freedom Tip of the Week
With spring around the corner it is a great time to schedule your semi-annual HVAC Tune-Up (we recommend spring and fall)! This generally cost $60 - $120 but can help prevent it from breaking down in the middle of the hot summer, extend the life of your system, and save you thousands in the long run! Remember, proper maintenance is always cheaper than waiting until there is a major malfunction.
📰 In the News
Many people wish they had learned about finances earlier in life
49% of Americans say it was until age 25 that they begun to learn how money works. See other stats in this interesting Empower article - article here
Are you struggling with Credit Card debt? You aren’t alone.
Americans Credit card balances climbed 5.5% in the 4th quarter of 2025 to reach $1.28 trillion. As a financial coach this one makes my heart ache. - article here
📈 Financial Freedom Insight
How to Pay Off $20,000 in Debt Without Ruining Your Life
Image Courtesy of iStock.com
Financial Freedom Insight: Table of Contents
You’re Not the Only One With Debt
Have a Plan
Step 1: Get to Grips with the Numbers
Step 2: Create a Strategy That Works for You
The Snowball Method
The Avalanche Method
Step 3: Find Extra Money
Step 4: Automate Your Payments
What Not to Do
Realistic Payoff Timeline
Final Takeaway
FAQs
“Affordability” is the political buzzword of the day, and with reason. It’s a real problem for most Americans, including high earners. One-third of American families with an annual income of $100,000 or more say they are struggling to pay their bills and have no money left over for savings.[1] As a result, U.S. householders are increasing their debt load to make ends meet.
Look, you are not alone if your debt is starting to seem out of control. Rather than feeling overwhelmed, why not tackle the problem one step at a time? This article shows some practical ways to help you get on top of your debt. Best of all, you can pay down your debt without ruining your life.
You’re Not the Only One with Debt
The Federal Reserve Bank of New York reports that the average U.S. household has an average of $105,000 in debt.[2] Now, that number includes mortgages, credit card bills, and auto loans, not all of which are necessarily bad. Having a mortgage and using a credit card sensibly, for example, are savvy ways to improve your credit score so you can get cheaper loans in the future.
But what if you have mounting high-interest credit card debt or an auto loan that’s going to last longer than your car? What if you have debt of, say, around $20,000 that you just can’t get a handle on?
The worst thing you can do is avoid the problem because it will only get worse. The best thing you can do is make some changes in your life. Small changes to your budget and lifestyle will not ruin your life in the short term, and they will definitely improve it in the long term. So, start with a plan.
Have a Plan
Problems always seem surmountable if you have an actionable plan. Laying out concrete steps that you can follow one at a time will also greatly reduce your stress levels because you can see a way forward.
Step 1: Get to Grips with the Numbers
Sit down and look at your debt. Figure out how much you owe where. Also figure out how much of your payments are going towards interest and how much is going towards the principle. List your minimum payments. Create a table to see your situation at a glance. These numbers will help you decide how to tackle your payments.
Step 2: Create a Strategy That Works for You
There’s no point telling yourself you’ll set aside $800 each month to pay down your debt if you know you will not follow through with the plan. Better to set a target of $500 and stick to it.
Also, save into an emergency fund before you start paying down your debt, or even better, do both at the same time If you don’t have an emergency fund (a savings account with around three month’s worth of expenses) you will likely fall further into debt if you face a financial emergency.
Once you have some emergency savings, there are a couple of methods you can use to pay down debt: the “snowball” method or the “avalanche” method.
The Snowball Method
If you choose this method, you will pay off your smallest balances first. For example, if you have more than one credit card to pay off, choose the one with the smallest balance, pay it off, and then cancel the card. Then, choose the next smallest balance and do the same thing.
This is a good strategy if you are motivated by achieving goals. Perhaps give yourself a reward after each milestone to keep you going. Buy a nice bottle of wine or order take out. Presumably you are conserving and not doing this on a regular basis!
The Avalanche Method
For the avalanche strategy, you pay off the debt with the highest interest rate or APR first. You won’t get the pleasure of striking off a credit card from your list quite so often, but this method means you will stop your most "expensive" money from compounding.
Let’s say you have a $5,000 credit card at 24% and a $1,000 medical bill at 0%, the avalanche method ignores the small bill and attacks the 24% card. This prevents that 24% interest from ballooning your total balance every month so that you can ultimately pay more of your principal balance down. This will make you debt-free faster.
Think of it this way. Paying off a debt with a 20% interest rate is financially equivalent to earning a 20% return on your money. No savings account or standard stock market investment can consistently offer that kind of yield.
Step 3: Find Extra Money
Alright. I know. You have no extra money, that’s why you have debt. But here’s where you can use your creative side.
Take a good hard look at your budget, particularly your expenses. Are there some lifestyle changes you can make temporarily that will give you more money to put towards debt? You might be surprised at the cash you can free up. Here are a few ideas.
Take Out Food
A take-out meal of $10 say three times a week, is $120 a month. Start cooking at home and you have a nice chunk of change. Cook healthy meals, and you also improve your health. This doesn’t mean you can never treat yourself, just less often.
Potential savings: $100 to $350 a month, according to Business Insider.[3]
Entertainment
Going out with friends is not something to eliminate from your calendar. We all need social time. But can you limit it to once a week? Or, how about choosing a social activity that doesn’t cost a lot, like running or biking? (You’ll need a bike of course).
Potential savings: around $100 a month, according to CNBC.[4]
Subscriptions
Gym memberships can be pricey. Take up an outdoors sport and you might not need a gym. Investing in at-home equipment and the Peloton app might be an option rather than paying for a gym membership.
What about your streaming habits? Can you do without Apple+ or HBO Max for a while? You might be surprised to see how much you are paying each month for subscriptions that you would not miss.
Potential savings: $23 a month or more, according to Yahoo! Finance.[5]
Clothing
Do you spend a lot on clothes? You might be able to save money by shopping at budget stores, consignment stores, or just shopping less in general.
Potential savings: $100 a month, depending on you buying behaviors.
Side Hustles
Do you have skills people might pay for like coding or graphic design? Can you take a part-time job? This would immediately give you extra money to pay down debt and keep you busy so that you aren’t tempted to spend money.
Potential earnings: upwards of $200 a month, according to SurveyMonkey.[6]
The ideas above show how relatively small lifestyle changes provide money to pay down debt. If you adopted all of the suggestions, a conservative estimate might be an extra $500 a month to pay towards your debt.
Now, use tools to your advantage to make sure you stay on track, such as automated payments and budget trackers.
Step 4: Automate Your Payments
Use your budget to figure out where you can find extra cash. Then, automate your debt payments so that you don’t have to think about them. Align them with your pay dates so that money is allocated to your debt before you have the chance to spend it. Pay more than the minimum owed so that you attack the principal balance as well as the interest payments.
What Not to Do
Don’t make changes that you will hate. Choose things that you can live with. Be open minded. Some changes, such a eating out less, might positively impact your life beyond the debt repayment.
Omit to build an emergency fund first; otherwise, if you have a financial emergency, you may have to borrow again and that will take you back to square one.
Lastly, life happens, so be flexible in your budgeting.
Realistic Payoff Timeline
Let’s say you have $20,000 in credit card debt with a 20% APR. Here are some pay-off scenarios assuming no new spending on the cards.
Monthly Payment | Time to Pay Off | Interest Paid | Total Cost |
|
$300 | ~9 years | ~$12,400 | ~$32,400 | Most of your payment will go towards interest and progress will seem slow at first. |
$500 | ~5 years | ~$8,000 | ~$28,000 | The difference in paying $200 dramatically reduced the time to debt free. |
$800 | ~2.75 years | ~$4,200 | ~$24,200 | Wow! This is a huge difference in the time it takes to pay off the debt. |
This calculator from Calculator.net gives you more accurate estimates based on your credit card interest rate, minimum payments, and amount of debt.
Final Takeaway
I hope this article has given you some motivation to start paying down your debt. Small changes in your lifestyle and habits may seem insignificant, but they can add up to a lot. You might not even notice them, an they might even improve your quality of life. Just make a start, be consistent, be patient, and see what happens!
FAQs
1. How much debt does the average U.S. household have?
According to the Federal Reserve Bank of New York, the average U.S. household carries about $105,000 in debt. This includes mortgages, auto loans, and credit cards. Some debt can be considered “good” debt, such as mortgage loans and credit cards that are managed responsibly.
2. What’s the best way to start paying off $20,000 in debt?
Start by understanding exactly how much you owe, your interest rates, and minimum payments. Then create a realistic plan with a monthly payment you can stick to. Find ways to spend less and earn more, such as limiting your spending on eating out, entertainment, and other luxury items, and finding gig or part-time work.
3. Should I build an emergency fund before paying off debt?
Yes. Ideally, you should build an emergency fund with about three months’ worth of expenses while paying down debt. Without it, unexpected expenses could force you to take on more debt and undo your progress.
4. What’s the difference between the snowball and avalanche methods? The snowball method pays off the smallest balances first to build motivation. The avalanche method pays off the highest-interest debt first to save the most money over time. Both are effective—the best choice depends on whether you’re motivated more by quick wins or long-term savings.
5. Can small lifestyle changes really make a difference in paying off debt?
Yes. Cutting back on takeout, subscriptions, and discretionary spending—or adding a small side hustle—can free up $300+ per month. Over time, these small changes can significantly reduce your payoff timeline and total interest paid.
Sources
[1] Caroline Banton, March 20, 2026, “Reasons High Earners Keep Living Paycheck to Paycheck.” SOFI, https://www.sofi.com/learn/content/living-paycheck-to-paycheck/. Accessed March 25, 2026.
[2] Megan DeMatteo, Dan Avery, March 5, 2026. “How much does the average American owe?” CNBC, https://www.cnbc.com/select/average-american-debt-by-age/. Accessed March 25, 2026.
[3] Sara Resende, June 16, 2025. “I cut takeout out of my budget and started meal-planning. I feel better, save $300 a month, and don't waste groceries anymore.” Business Insider, https://www.businessinsider.com/quit-ordering-food-delivery-started-cooking-save-money-2025-6. Accessed March 25, 2026.
[4] Aditi Shrikant, August 7, 2024. “How to maintain friendships when you can’t afford to go out: ‘Know which relationships are valuable to you’”. CNBC, https://www.cnbc.com/2024/08/07/4-tips-for-maintaining-friendships-when-you-cant-afford-to-go-out.html#:~:text=And%20the%20move%20pays%20off,which%20you%20want%20to%20maintain.%22. Accessed March 25, 2026.
[5] Dashia Milden, June 18, 2025. “Don't Let Sneaky Subscriptions Ruin Your Budget. Americans Spend More Than $1,000 a Year on These Services, CNET Survey Finds.” CNET. https://finance.yahoo.com/news/subscriptions-control-cnet-survey-shows-110000941.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAKdUV0Ul3wUJSgCft-zTdzvn25Lz_Ndp1wpesVZA9rNOz2MXDQUeDTxregmOSvqPqCGIkqIIsOn5jtSEhalGtXvdgdltZ0KPdbqahE0iPAYUr0XJdpZXcyDOrgEcMPkjzuijTLPL0j6EQOg1fgOCwLPXOflXtg3iTi5IRnpFkvF-. Accessed March 25, 2026.
[6] Sam Gutierrez, November 11, 2025. “Side hustle statistics 2025: Trends, income data, and expert insights.” https://www.surveymonkey.com/curiosity/side-hustle-statistics/. Accessed March 25, 2026.
📙 Nathan Haas’s Scripture of the Week
Proverbs 19:11 (ESV)
“Good sense makes one slow to anger, and it is his glory to overlook an offense.”
Thanks for reading!
Haas Trade Financial Freedom Insights
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