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Addressing debt in the new year can relieve financial stress and open up opportunities for savings and investments. High-interest debt, like credit card debt, can spiral out of control and prevent you from building wealth.

Reducing your debt is a key factor in improving your financial health and creating financial freedom. By paying down debt, you’ll free up resources to build an emergency fund, save for retirement, or take on new investments. Moreover, lowering your debt load improves your credit score, which can lead to lower interest rates on future loans.
Taking a proactive approach to debt, whether it’s through consolidation or creating a payment plan, gives you control over your finances. If left unchecked, debt can accumulate quickly and have long-term financial consequences. Starting the year with a debt repayment strategy sets you on the path to financial independence and peace of mind.
Key Actions to Take
Prioritize High-Interest Debt: Focus on paying off high-interest debt, such as credit cards, first. Use the debt avalanche method (paying off the highest-interest debts first) or the debt
snowball method (paying off smaller debts first) to create a plan.
Consolidate Your Debt: If you have multiple high-interest debts, consider consolidating them into a
lower-interest loan. This can simplify your payments and save you money on interest.
Automate Payments: Set up automatic payments for all your debt obligations to avoid late fees and
to ensure you’re making consistent progress toward paying off your debt.
Avoid New Debt: Limit new debt accumulation by sticking to a budget and using credit cards only when necessary. Build an emergency fund so you can handle unexpected costs without turning to credit.
Insider Tips
Track your debt repayment goals: Create a debt repayment calendar with monthly milestones to keep you on track. Track your savings from discounts on debt-related services and apply those savings directly to your debt reduction.
Use the “debt avalanche” method: List all your debts from highest to lowest interest rate and focus on paying off the highest-interest debt first. As you pay off one debt, apply that payment to the next, accelerating your progress.
Automate your debt repayments: Set up automated payments through your bank or credit card to ensure that your debt is consistently paid down. Many financial institutions offer lower rates or discounts for setting up automatic payments.
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