Money Moves for the New Year: How to Pay Debt and Boost Your Credit Score
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Here's your Money Briefing for Monday, December 23rd. I'm J.R. Whelan for The Wall Street Journal. Here we are, about a week away from turning the calendar to 2025. And you know what that means, setting those New Year's resolutions like getting ourselves in shape. For a lot of people, ringing in the New Year also includes a plan to get their finances in shape. But solving personal finance challenges is no easy task.
How do I improve it to the best of my ability within the next year?
How easy or difficult the job market is?
How long will my money last? Welcome to part one of our special series, Money Moves for the New Year. Over the next week, we'll talk to WSJ reporters and financial professionals about the biggest personal finance questions you have for 2025, like boosting your credit score, leveling up your career, prepping for retirement, and saving up for a big expense. So how do you make a plan and stick to it? Today, we're kicking off our series by talking about paying off debt and improving your credit score.
I have close to $10,000 in credit card debt.
That's Aqua Richards. She's 25 years old and lives in Atlanta, Georgia. And she has two major goals for next year.
One of my biggest is to pay off all of my credit card debt.
That debt is split between three cards. She traveled a bit this year, did some online shopping, and racked up debt from when she was out of work. To meet her 2025 financial goal of paying off her credit cards, Aqua knows she needs to have a plan.
How does this episode introduce the 'Money Moves for the New Year' series and its goals?
Her biggest question, what's the best approach?
What are the best strategies? Is debt consolidation a good idea? Is a credit card transfer a great idea?
To dive into this, I spoke with Stephanie Genkin. She's a certified financial planner and founder of the investment advisory firm, My Financial Planner. Stephanie, it's one thing to say you're going to get yourself out of debt. It's another thing to actually do it. How should someone approach this process?
First of all, anybody who's in debt, be kind to yourself if you have credit card debt and try not to judge yourself or be shamed by it. This will help you actually tackle it. And the second thing I would say is the mindset is not to try to do it so fast because probably it didn't happen quickly, but to give yourself grace to actually get rid of it properly.
What's the best strategy to do that?
So there's two methods that people use. One is the snowball where you start with the smallest debt first, build that muscle up, and then it's motivating to keep going. It's like practicing for a marathon. You run short races first and you build up. And that works for some people where they might have self-doubt and they need a quick win. The other way of doing it is looking at the highest interest rate first. That's going to save you the most amount of money. But it's also possible that across three cards that total $10,000, it's a long slog and you can get discouraged along the way.
Aqua wanted to know if debt consolidation was a good option. Can you explain what that entails?
Debt consolidation is usually working with a company that is going to help put all your debt together, possibly lower the rate, do some negotiation. I don't really favor that as the first thing to go to. I like to encourage do-it-yourselfers first and gain that confidence with a little bit of organization to get it done. So one of the things that one should try before even just throwing up your hands and saying, I can't do this, I'm going to refer to a debt consolidation. In this case, I'll use the example of take a clean piece of paper and write down each credit card, the total balance, the interest rate, and your monthly minimum payment.
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Chapters
5 chapters
1
What is the main topic discussed in this episode?
0:00–2:13
2
How does this episode introduce the 'Money Moves for the New Year' series and its goals?
2:13–9:25
3
What are Aqua Richards’ 2025 financial goals and debt situation?
9:25–13:47
4
What mindset and first steps does a financial planner recommend when tackling credit-card debt?
13:47–16:23
5
How do the debt-snowball and highest-interest strategies compare for paying off multiple cards?
16:23–16:33
Speakers
5 identifiedMore from WSJ Your Money Briefing
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