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Texas Comptroller of Public Accounts
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Texas Comptroller of Public Accounts
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Since 1974. 50 yearsFiscal Notes A REVIEW OF THE TEXAS ECONOMY

economics

April 2025 | By Jess Donald

Taking control
of debt

A path toward financial well-being



Debt can be a valuable tool to acquire a home, pursue a degree and meet other long-term personal goals, but if managed improperly, debt can also become a serious strain.

Man tied to an anchor.

map of Texas showing Dallas, Austin, Houston and San Antonio

This is evident in Texas, where an October 2024 LendingTree study, The Most and Least Debt-Ridden US Metros, named four major cities — Austin, Dallas, Houston and San Antonio — among the nation's most burdened with nonmortgage debt. April is Financial Literacy Month, so now is an opportune time to focus on understanding and managing debt effectively.



Fortunately, a wealth of information is available to help you strategically manage and repay debt and facilitate long-lasting financial well-being.


FOUNDATIONAL FISCAL LITERACY

A holistic understanding of your finances is the first step
toward fiscal literacy and effective debt management.


KNOW WHAT YOU OWE

  • List all debts, such as credit cards, personal loans, auto loans and student loans.
  • For each debt, note:
    • Total owed.
    • Monthly interest amount.
    • Interest rate.
  • Regularly check your credit score.
Explained in text.


STRATEGIC DEBT REPAYMENT

Choose a repayment strategy that fits your goals and motivation.

Debt avalanche strategy

Explained in text.
  1. Make minimum payments on all debts.
  2. Direct extra payments to the debt with the highest interest rate.
  3. When the most expensive debt is paid off, focus extra payments on the next-highest interest rate debt.
  • Benefit: Minimizes overall interest paid.

Debt snowball strategy

  1. Make minimum payments on all debts.
  2. Direct extra payments to the debt with the smallest balance.
  3. Once paid off, focus extra payments on the next-smallest balance debt.
  • Benefit: Provides quick wins and boosts motivation.
Explained in text.


Debt management tools


Explained in text.
Explained in text.
Balance Transfer Credit Card
  • Transfer high-interest debt to a card with a lower or zero percent introductory annual percentage rate (APR).
  • Consider: Transfer fees and the APR after the introductory period.
Debt consolidation loan
  • Obtain a low-interest loan to pay off multiple debts, leaving you with a single monthly payment.
  • Consider: Interest rates and loan terms compared with your current debts.
Lower credit utilization
  • Paying down balances with the highest percentage of their limit used can improve your credit score.
Budgeting apps
  • Use technology to simplify budgeting.
  • Basic apps connect with your accounts, automatically tracking and categorizing spending to clearly show where your money is going.

Explained in text.
Budgeting apps
  • Use technology to simplify budgeting.
  • Basic apps connect with your accounts, automatically tracking and categorizing spending to clearly show where your money is going.


The Takeaway


By implementing a strategic debt repayment plan tailored to your circumstances, you can gain control of your finances and build a more secure future.


Sources: Federal Reserve Bank of Dallas, LendingTree and NerdWallet.

Disclaimer: This article includes links to external sites for general informational purposes only. We are not responsible for their content or accuracy. Additionally, the information in this article does not constitute financial, legal or professional advice.

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