Debt is awful. The feeling of owing someone money, especially a large amount of money, is the worst. Continuous debt can feel like a boulder sitting on your shoulders, weighing you down and restricting what you can do with your own money.

But how do you get out of debt? There is no one clear-cut answer, but there are multiple ways you can begin to dig yourself out of the hole.

If you have a large amount of debt, it’s time to create a plan to get out. A plan is easily repeatable, meaning it requires less thought, leaving a smaller chance that you will stop following it. Take a look at these debt reduction methods to see which one fits you.

The Snowball Method

This method sets you up for a quick win to start you on your debt repayment journey. Just a like a snowball starts small and gradually grows, the Snowball Method has you start with your smallest debt balance and work your way to gradually larger debts.

• Order your debt balances from smallest to highest
• Pay off the smallest one first while making minimum payments on the rest
• Getting the smallest one paid off first gives you encouragement to stick with it

The Avalanche Method

This method is somewhat the opposite of the Snowball Method, but it helps you pay the least amount of money over time. By starting with the loan with the highest interest rate, you reduce the amount of interest you pay on your loans.

• Order your debts from highest interest rate to lowest interest rate
• Pay down the highest interest debt first while paying the minimum on the other debts
• You’ll pay far less in interest over the life of the debts

Other Debt Repayment Methods

• Hybrid- this is the same as the Avalanche, except after ordering your debt from highest to lowest interest rate, you move the debt with the lowest balance to the top to pay first. This gives you the quick win you find with the Snowball, but also helps reduce the interest you pay.
• Which is most annoying?- which of your debts is the most annoying to you? If one is more irritating than the others, pay that one first.
• Which debt has the most emotional impact- similarly, if there is debt that carries more emotional impact, such as paying back a family member or friend, get rid of that one first.

Which plan sounds good to you? Whichever you choose, you need to stick with it. Debt can seem insurmountable, but you need to believe in the plan you choose. That’s the only way you’ll get back to living without the weight of debt on your shoulders.

Timberwood Bank, Member FDIC

We have discussed a lot of topics relating to Financial Literacy Month on our Facebook page and in previous blog posts this month. One topic we haven’t yet touched on is saving money, a skill that most adults in the United States appear to have trouble with.

It is estimated about one in three U.S. adults don’t have readily accessible emergency savings. That’s approximately 72 million people. Why? Probably because we all think saving is hard. We view saving as a sprint to a magical goal, rather than the marathon of small, consistent contributions it actually is.

However, saving is important, easy and necessary for the financial success we crave.

Importance of Saving

Saving money isn’t all about accumulating as much money as you can.  It can help you achieve short and long-term goals. Saving can also help ensure you are prepared for emergencies.

For our purposes today, let’s focus on what it takes to create an Emergency Fund so that you have enough money saved for “rainy day.”

Step 1- Open a Savings Account (If You Don’t have One Already): by opening a savings account you are separating this money from what you’ll use for purchases. Choose your savings account based on the following factors:

• Fees and limitations– most savings accounts of restrictions on minimum balances and withdrawals. Be sure you know what these are.
• Interest- this allows your money to work for you. A general rule is that the higher the interest rate, the higher the minimum balance you’ll have to keep in the account.
• Accessibility- can you withdraw or transfer your money at any time, or are there limitations?
• Benefits– can you access your money through ATMs, Online Banking or Mobile Banking?

Step 2- Set Your Savings Goal: an Emergency Fund should cover three to six months’ worth of expenses in the event you lose your job or become temporarily disabled. Once you have your overall goal, set smaller goals to better gauge your progress and to make the task of saving seem less daunting.

Step 3- SAVE! Transfer your set amount from your checking account to your savings account every time you get paid. Better yet, use Online Banking to set up a recurring transfer for this amount to occur every payday. This helps in two ways: 1) it ensures you are actually saving, and 2) it eliminates the chances of you deciding to use that money for something else.

As your local community bank, Timberwood Bank tries to make saving easy. Our savings accounts offer the tools necessary to help you make steady contributions and reach your savings goals. You can apply for your savings account using our online Deposit Account Application or by coming by our office in Tomah.

Timberwood Bank, member FDIC

We all have that friend or person we know that is good with money. It seems like they always have enough cash on hand or make the right financial decisions. How do they do it?

Most likely they manage and examine their finances at least once or twice a week. However, not all of us have the time to do that. Keeping track of the money in our checking account is hard enough. Here are a few ways to keep an eye on your account:

1. Use your checkbook’s ledger- record any purchases you make with a check in the ledger that came with your checkbook. This is easiest to do as you write the check. Simply fill out the check, then record the date, amount being paid, the check number and any other information you have space for in the ledger.
2. Use online or mobile banking- if you have access to an online banking or mobile banking account, you will be able to track your transaction history. This helps prevent overspending and ensures the money you are spending is going to the right places.
3. Check your monthly statements- you should be receiving monthly account statements, either through the mail or through an electronic delivery system like eStatements. These allow you to see all purchases and deposits for your checking account for the last billing cycle.
4. Use a telephone banking service- many checking accounts and financial institutions offer a telephone banking system. You may be able to check account balances, review checks and transactions over the phone.
5. Call your bank and ask- if you ever have questions about your account, you are well within your rights to call and ask your financial institution about them. As your bank, they have the responsibility to help you with any issues you run into.

Remember that managing your checking account is a continuous process, not a one-time thing. You have to work at it in order to be successful at it.

If there is any way Timberwood Bank can help you manage your finances better, please don’t hesitate to call or come by our office Tomah. We look forward to seeing you soon!

Timberwood bank, Member FDIC