Even though the holidays were nearly two months ago, some people are still recovering. Many people in Milwaukee may have used a credit card or two to purchase gifts over the holiday season. However, it is all too easy to overspend during a time of love and generosity, which means 2020 brings more than just a new decade — for many it means facing a whopping January credit card bill.

Credit card debt can be difficult to handle, especially if you have multiple credit cards with large balances. It may seem as if there is no way to pay it all back and return to solid financial footing. However, there are two strategies consumers can use to tackle credit card debt: the debt snowball method and the debt avalanche method.

The debt snowball method

In the debt snowball method, consumers will funnel as much money as they can to paying off the smallest debt first while paying the minimum amount on their other debts. Once the smallest debt gets paid off, that payment is rolled into the minimum amount due on the next smallest debt, etc. Ultimately, this means that the amount paid grows exponentially until all debts get paid off.

The debt avalanche method

In the debt avalanche method, the consumer will funnel as much money as they can to paying off the debt with the highest interest first, while making the minimum payments on their other debts. Once the debt with the highest interest gets paid off, those payments plus the minimum amount due on the debt with the next highest interest gets paid off until the debt gets erased.

Bankruptcy may also be the answer to overwhelming debt

It is entirely understandable why a person’s credit card balances can become overwhelming. The debt snowball method or debt avalanche method of paying back debt may work for some. Others, however, may decide that filing for bankruptcy is another way to handle debts that are simply out of their control. Through Chapter 7 bankruptcy, a person’s assets (with some exceptions) are sold off, and the proceeds used to pay back debts, allowing for the discharge of many types of debts. In Chapter 13 bankruptcy, the debtor will establish a feasible three to five-year repayment plan, after which many types of debts will be discharged.

When a person needs help with credit card debt, it can help to discuss the matter with a bankruptcy attorney. Attorneys understand how clients facing overwhelming debt may worry about how to make ends meet. They can help clients find a way to fix their financial problems, relieving the stress that comes when you are living paycheck-to-paycheck. People should not lose hope that credit card debt will be their financial downfall. With the right help, debtors who overspent during the holidays can find a way to handle their debts and continue in 2020 with a bright financial future.