A Missourian earns $26,000 per year after taxes and needs help with navigating three debts. The first debt is a personal loan that has a $1,760 balance. The second debt is one to an internet provider that is around $300. However, this charge is incorrect, and the Missourian has deferred it to another debt collector.
The final debt is a $10,000 auto loan with a three-year plan. The Missourian admits to making mistakes in the past and turned to Reddit for advice on managing the loans. These were some of the suggestions Redditors offered.
Don't Miss:
- $100k+ in investable assets? Match with a fiduciary advisor for free to learn how you can maximize your retirement and save on taxes – no cost, no obligation.
- Named a TIME Best Invention and Backed by 5,000+ Users, Kara's Air-to-Water Pod Cuts Plastic and Costs — And You Can Invest At Just $6.37/Share
Today's Best Finance Deals
Work On Your Income
Although it is important to pay off debt and create a plan, you can only get so far with a low income. Penny pinching eventually reaches its limits, and that's why multiple Redditors suggested that the Missourian boost their income.
A side hustle or part-time job can go a long way in helping the Missourian out of debt. The extra work will eat up more time on their schedule, but having more control over long-term finances is worth the short-term sacrifice.
The Missourian may also pursue a higher-paying career after exploring new income streams. Staying at the same job with the same pay isn't a winning strategy in the long run. Looking for ways to increase income is the best long-term solution for the Missourian.
Trending: This AI-Powered Trading Platform Has 5,000+ Users, 27 Pending Patents, and a $43.97M Valuation — You Can Become an Investor for Just $500.25
Start With The Smallest Debt
Some Redditors suggested the debt snowball strategy to pay off debt. After paying off the internet provider, the Missourian can prioritize the personal loan and wrap up by paying the auto loan.
Knocking out the $300 debt will give the Missourian a small win that can compound into something greater. Paying off this debt also frees the Missourian from the debt collector's phone calls.
The Missourian still has to make minimum monthly payments on the personal loan and the auto loan. However, tackling smaller balances can help the Missourian feel like they are getting on the right track. Given that the Missourian admitted to making financial mistakes, the debt snowball method seems more appropriate than the debt avalanche method.
See Also: If You're Age 35, 50, or 60: Here’s How Much You Should Have Saved Vs. Invested By Now
Avoid Making Bad Financial Decisions
It's good that the Missourian acknowledged past mistakes. Some people refuse to admit or address the mistakes that got them into debt. It can also result in a financial recovery. Paying off debt and saving money can put the individual on a better path toward long-term financial goals.
Unfortunately, some people rebound financially only to fall back into bad habits. Some people pay off credit card debt only to blow through the money all over again. Other people make matters worse. These types of people may take out home equity loans to consolidate credit card debt and then proceed to get deeper into credit card debt.
It's important to acknowledge and correct the bad financial habits that put you in an unfavorable position. That way, when you apply good financial habits and recover, you can preserve your success instead of falling back into bad habits.
Read Next: Can you guess how many retire with a $5,000,000 nest egg? The percentage may shock you.
Image: Shutterstock
© 2025 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
