Tag: underscored-personal-finance

April 18 — tax day — is a day you won’t want to forget in 2023. And while it’s a chore many of us dread, for better or worse, your taxes will be due before you know it. To make your life less chaotic, you might consider using an online tax program. These applications take all your income and expense numbers, calculate your total tax and even electronically file your return for you.

But with many online tax programs available, which one should you use? A few years ago we tested the top four programs by entering our tax information into each program. Then, we compared the results to that of a tax professional to see if the programs could get you the same (or better) results.

We revisited the same programs for the current tax year and explored their new features to see if our verdict remains the same.

Each program offers four different filing options based on the complexity of your taxes. Each cover many of the same forms and deductions, but there are some key differences. Prices also range widely across all of the platforms.

This chart lists out those options along with their respective prices at the “do it yourself” level. Some of the programs are also available to purchase via Amazon or your local office supply store at a cheaper price, though you’ll only be able to “try before you buy” at each tax program’s website.

The basics of these programs don’t change much from year to year, so if you have a straightforward tax situation — a W-2 from a job and perhaps some interest or dividend income — all of these programs offer a free option that will likely work for you. However, TaxAct will still charge you to file your state return.

Not many forms are included at the most basic level, though H&R Block provides the most forms under this no-cost filing option. On the flip side, H&R Block will also work hardest at trying to sell extra options to you throughout the process, so “free” might not end up being truly free if you decide to take them up on one or more of their pitches.

If you have relatively simple taxes but still more than what’s allowed in the free versions, all of the basic-level paid options will work just fine, so cost might be your biggest factor when selecting one of the four. Since professional accountant support typically isn’t needed when it comes to a simple tax situation, TaxSlayer should be your go-to for its low-cost option.

However, if you have more complex taxes — which could include running a small business, having numerous deductions or owning lots of real estate — you’ll want to put cost aside and use TurboTax. Based on our testing, it’s hands down the most customer-friendly option with an easy-to-use platform.

But you may find that you need to pay some of TurboTax’s add-on fees to ensure the most accurate results, meaning you might be better off just handing over your tax documents to an accountant to save the headache. Taxes are complicated, and making sure you get everything accurate while maximizing your deductions is just that: complicated.

From the moment you arrive at the TurboTax website, the company holds your hand to help you figure out the right software version to use for your specific taxes. The site asks a number of questions about common financial items — such as whether or not you have a job, pay rent, pay student loans, sold stock, have children and more. The system will automatically find the TurboTax version you need based on your responses.

Out of all four tax programs, entering my W-2 information was by far the easiest with TurboTax. With some of the other programs, I had to manually enter each line item from my W-2 form, but not with TurboTax. By just entering my employer ID and the dollar amount from box 1, the program was able to automatically import my entire W-2 and populate all the required boxes. If TurboTax doesn’t recognize your employer’s EIN, you can also take a photo of your W-2 form using the TurboTax mobile app.

I was also able to import some of my 1099-INT and 1099-DIV forms by logging into my respective financial institution websites right from the TurboTax site. This made the process seamless and ensured all information was entered correctly.

My personal taxes are on the complicated side, and TurboxTax’s search feature was a huge help. Since not every form was presented to me throughout the process, I had to do some digging to find some of the more uncommon ones. But TurboTax has a great search feature, which allows you to enter the form name and you’ll immediately be taken to that form. This was unique to TurboTax, and made entering all my forms much easier.

Unfortunately, TurboTax doesn’t offers the same complimentary live tax advice options it used to have with its three paid versions. Instead, there’s a paid upgrade option — called TurboTax Live Assisted — which costs between $89 and $209 depending on the complexity of your taxes. With this service, you’ll be able to ask a tax expert any tax questions you may have throughout the process, while also having them review your return line-by-line. You’ll also then have the ability to speak to an expert throughout the year with any additional questions.

While most of these software programs offer some level of guidance, in my experience TurboTax provided excellent help — despite having to pay for it. I did my TurboTax work late at night, and I wanted to test their TurboTax Live feature. With just a 5-minute wait, I was able to speak to an attorney with eight years of experience. I was also able to share my screen with their representative, who guided me to the correct form by highlighting the steps on my screen.

TurboTax Live is available during most waking hours in the US — 5 a.m to 9 p.m. Pacific time, 7 days a week and gives you the option to speak to an expert through audio or video (on many devices, such as your mobile phone or computer) or via chat. But truthfully, we found TurboTax’s online resources were more than adequate to answer any questions we had, making the Live support not a necessity unless you also want the CPA review at the end.

In addition to the paid TurboTax Live service, if you get fed up with doing your own taxes at any point during the process, you can offload the whole thing to a tax expert who will finish it for you — called TurboTax Live Full Service. The cost of this service is quite expensive at $209 to $399, depending on which version your taxes require. At that cost, you might want to compare pricing to a local tax expert to see which one offers the best price.

However, if you have a very basic return that only requires TurboTax’s free version (basically if you only need to file Form 1040), and you’re able to complete your taxes and file by March 31, you can access the TurboTax Live Assisted feature for free. That means if you can get ahead of the game, this is a great opportunity to have someone walk you through the process at no additional cost. (For simple returns only. Not all taxpayers qualify.)

Best free tax software: H&R Block ($34.99 for Deluxe + State version; amazon.com)

Even if your taxes are a step up from simple, you still might be able to file through H&R Block’s free filing option, since it includes Schedules 1, 2 and 3, which are some of the more common forms required by many taxpayers. This allows you to cover child and dependent care expenses, student loan interest deductions, tuition and fee statements and unemployment income. With many other tax programs, you may have to pay for the mid-tier service in order to access these options.

However, while many people should be able to use the free option, H&R Block does regularly try to upsell you. Compared to the other programs, it has significantly more pop-ups offering the chance to buy partner apps or additional tax services. You can ignore them, but they become a bit annoying.

A few years ago, we felt that one of the downsides to H&R Block’s software was that the interface wasn’t very user-friendly. Fortunately, the program now has a new look and feel, which greatly improves the experience. For instance, I found it much easier this year and last to use the search function to find forms I had trouble finding in the past.

If filling your taxes on your own proves to be more complex than you thought, H&R Block offers two options to help ease the process. The first is unlimited live expert help, including the ability to share your screen and communicate via on-demand chat or video support. This add-on service starts at $70.

When we tested this feature, we found it useful and the wait time to be significantly shorter than last year. While our wait was just a minute this year, last year it was consistently 20+ minutes before an expert was available to help.

And if you truly want to have someone else do your taxes for you, you can file with an H&R Block tax professional, similar to filing with your own accountant. The cost of this service starts at $85, but H&R Block doesn’t give you the full price before you actually meet with a tax professional. We were told that the more complex your taxes are, the higher the fee will be.

With some programs charging as much as $119 to file a complicated Federal return, TaxSlayer has the lowest prices when it comes to more complex tax situations across all four programs. And while one might assume that a lower cost equals lower results, that turns out not to be the case.

I found it easy to navigate the TaxSlayer website, and entering some forms was even easier than other sites. For example, with TurboTax, figuring out where to enter my Schedule K-1 information wasn’t as simple as it should have been. But with TaxSlayer, it was an upfront option where I didn’t have to go searching for it.

Even with its no-cost option, TaxSlayer offers free phone and email support. However, you’ll need to upgrade to the Premium version to speak to an actual tax professional or even use their technical support chat feature. But the cost of the Premium edition is just $50, while the same level of support with the same filing needs will cost almost double with TurboTax.

That being said, the support received was not up to the same standards as the other software programs. Finding the option to get in touch with a representative was not very straightforward and requires you to go through their general Q&A search first. If your question is then not answered, it gives you the option to call phone support to chat with a representative.

We went through the process and a representative was available immediately. However, the person was not a CPA and instead VITA certified (which means they went through the IRS’s Volunteer Income Tax Assistance certification program). If you want to speak to a tax professional, you’ll need to submit your question through the Help & Support option and someone will respond back within 24-72 hours.

It’s important to keep in mind that TaxAct’s $100,000 Accuracy Guarantee covers any error made by the program itself, not errors that you might make entering the data. According to the TaxAct site (the bolding is ours), “if an error in our software results in you ultimately receiving a smaller refund or larger tax liability than you receive using the same data with another tax preparation product, we will pay you the difference in the refund or liability (up to $100,000) and refund the applicable software fees you paid us.”

But aside from having the absolute best accuracy guarantee, TaxAct is fairly simple to use, its pricing is in the middle of the road across the four programs, and it offers the option to file your taxes jointly with an expert.

However, one negative with using TaxAct is that filing your state return with the basic version is quite expensive. While all three of the other software packages we reviewed include one free state tax return with the basic version of each program, filing a basic return with TaxAct is $39.95 per state. If your needs are basic, this could easily persuade you to use another tax option.

Unfortunately though, their Xpert Assist service is no longer free like we’ve seen in past years. For all plans, this service is an additional $39.95. Regardless, this add-on service is significantly less expensive than what you’ll pay with TurboTax or H&R Block.

With the Xpert Assist service, you’ll be able to speak to a tax professional over 7 days a week through April 19, although the hours are more limited. Using this feature is incredibly easy and you don’t even have to wait on hold. Instead, you’ll request a call back on the TaxAct site and receive an estimated wait time. We used this feature twice and on a Friday mid-day, our wait time was just a meager two minutes. When we tried to get in touch with an expert last year, it took us an outrageous 77 minutes to receive a call back.

Another big change for this year is that TaxAct is no longer featuring their Xpert Full Service option. This was introduced last year for the first time and allowed you to fully hand your taxes over to a tax expert at a relatively favorable price. This means if you were hoping to offload your taxes again this year, you might want to instead consider another tax program.

In our original tests, we went through each of the four programs and completed a real-life tax return with a fairly high level of complexity, attempting to enter every piece of data and use all the features available. We then compared the resulting return from each program to the return prepared by a professional CPA using the same information to see if the amount owed on the federal and state levels matched.

This year, we went back through all four programs and rechecked the features we had originally tested. Then, we tested any new features and confirmed each software’s current pricing.

The main criteria we evaluated included:

Using the test criteria described above, we assessed each tax software program on accuracy, ease of use, cost and in terms of its guaranteed accuracy.

While there are some interesting new features in this year’s crop of programs, there weren’t any breakthroughs that led us to change our overall impressions from last year’s tests. And after testing each of these programs, I realized that doing my complex taxes myself isn’t for me and I still prefer a professional. But for simpler returns, using a tax program is definitely a cost-effective option.

Fortunately, if you start your tax return directly at any of the four tax program websites, you don’t have to pay upfront — you only pay at the end of the process when you file. So, if you try one of these products and end up wanting to bring your taxes to a professional, there’s no money lost. Or if you start with one tax program and aren’t happy with how it’s going, you can always try another to see if it works better for your particular tax scenario.

Get all the latest personal finance deals, news and advice at CNN Underscored Money.

If you’re struggling to pay off credit card debt, you’re definitely not alone. A recent report from Lending Tree showed that Americans owed a collective $925 billion on their credit cards at last count, and the average unpaid balance per borrower works out to $6,569.

Even worse, the average credit card interest rate or annual percentage rate (APR) is currently 16.27%. This means the average consumer with credit card debt has a large percentage of their payment going to interest charges. It also means that, for consumers paying this rate or even higher, paying off credit card debt is more difficult (and costly) than it needs to be.

Fortunately, there are plenty of strategies you can use to manage debt and pay off your credit cards once and for all. So if you’re struggling with debt you can’t seem to get rid of, consider one of the following debt repayment strategies that are proven to work.

The debt snowball method helps consumers pay off debt by helping them score psychological wins early on. With this strategy, participants list out all the debts they have from smallest to largest, and then focus on the smaller debts early on.

To use the debt snowball, you would make the minimum payments on all your largest debts each month, then funnel any extra money you have toward your smallest debt. Over time, the smallest debt gets paid off, at which point you “snowball” the extra money you were paying toward the next smallest debt.

With the debt snowball method, the smallest debts melt away over time, leaving only the bigger ones. Eventually, users are left paying off only their largest debt until they become entirely debt-free.

Example: Let’s say you have four credit cards with balances of $7,000, $4,000, $3,300 and $2,500. With the debt snowball, you would focus your biggest payment on the $2,500 balance first, followed by the $3,300 balance and then the $4,000 balance before focusing on paying off the $7,000 balance last.

All debt reduction strategies have positives and negatives — there’s no perfect solution. So here are the pros and cons of the debt snowball.

Pros:

Cons:

Unlike the debt snowball, the debt avalanche method helps consumers pay off debt in the most mathematically advantageous way possible. With this strategy, participants list out all the debts they have based on the interest rate they’re paying on each one, and then focus on debts with the highest interest rates first.

To use the debt avalanche, you make the minimum payments on all your lowest interest debts each month, then funnel any extra money you have toward your debt with the highest APR. Over time, the debts with the highest interest rates get paid off, at which point you “avalanche” the money you were paying toward the debt with the next highest APR.

As you go, you’ll be paying off your debts with the highest interest rates, then the ones with lower interest rates, then one debt, then none. This strategy helps you save the most on interest since you tackle debts with the highest APR first.

Example: Let’s say you have four credit cards with APRs of 22.99%, 19.99%, 12.99% and 11.99%. With the debt avalanche, you would focus your biggest payment on the debt with the 22.99% rate first, followed by the 19.99% debt, then the 12.99% debt and the debt with the 11.99% APR last, regardless of the size of each debt.

Pros:

Cons:

Consumers can also use a debt consolidation loan, or a personal loan, to get out of debt. With this strategy, you borrow enough money to pay off all your credit cards, then begin making a single monthly payment toward your personal loan instead.

Personal loans can be a good choice for debt consolidation since they come with fixed interest rates, fixed monthly payments and a fixed repayment timeline. This means you know exactly how much you owe at any given time and exactly when you will become debt-free.

Example: Let’s say you owe $10,000 across four credit cards with relatively high APRs. If you took out a seven-year personal loan for that amount, you would use the loan funds to pay off all your credit cards, and then put all your monthly payments toward paying down the one personal loan. In this example, if you qualified for a $10,000 loan with a 6% interest rate, you would pay $146 per month for seven years (84 months) until you became debt-free. At the same time, you would pay a total of $2,271 in interest charges.

Pros:

Cons:

Another debt repayment strategy involves applying for a balance transfer credit card. Cards in this niche let you consolidate and pay down debt at a 0% APR for a limited time, usually up to 21 months. A balance transfer fee is required, but individuals who can pay off their debt during their card’s introductory period get the chance to save big on interest and make progress toward paying off their debt faster.

Example: Let’s say you owe $10,000 across four credit cards with relatively high APRs, and you apply for a balance transfer card that offers a 0% APR on balance transfers for 21 months in exchange for a 5% balance transfer fee. After you consolidate your debts, you’d owe $10,500, including the fee, but if you were able to pay $500 per month over 21 months, you could pay off this debt with $0 in interest charges.

Pros:

Cons:

If you want to get out of debt, you need to be willing and able to change your lifestyle — at least for a while. Simple tips that can help you stay on track include:

Make sure the debt repayment strategy you use makes sense for your personality and your lifestyle. For example, don’t apply for a balance transfer credit card if you know you’ll be tempted to use it for purchases.

If you keep using credit cards, you may never pay off your debt. While you’re in debt repayment mode, it helps to steer clear of credit cards and stick to cash or debit instead.

Take a closer look at your lifestyle to look for signs of wasted cash. Try shopping grocery sales, cooking more meals at home and avoiding places and situations that might entice you to overspend.

Write down your income in one column and all your regular bills and expenses in another, then see how they compare. A written budget can help you stay focused and on track with your goals, including your current debt repayment strategy.

Racking up debt is often a piece of cake, but paying it off can be downright painful. Fortunately, these debt relief methods can help you save money, pay off debt faster or both.

We hope one of the strategies in our guide can help you craft a plan that works — even if it takes a while. And if you’re worried about defaulting on your debt, falling short on your obligations or even facing bankruptcy, reach out to a credit counseling agency for help.

Get all the latest personal finance deals, news and advice at CNN Underscored Money.

For many people, 2022 was a difficult year, with high inflation and a sinking stock market taking a toll on the personal finances of many Americans. Fortunately, a new year is almost here, and many people are considering their options and vowing to improve their financial situation in 2023.

But New Year’s resolutions are hard enough to keep even when the world isn’t throwing extra challenges your way. So we’ve put together a list of three realistic ways you can start getting your personal finances in order in 2023, along with some of our favorite financial tools that can help you along the way.

First, note that we said a portion of your debt, not the whole thing. Studies show that the best way to make a New Year’s resolution stick is to set specific, obtainable goals. And if you’ve spent several years getting yourself into debt, it’s going to be really hard and frustrating to try to get out of it all at once.

But you can take several manageable steps to not only pay down some of your debt, but to also set yourself up so that the remainder of your debt is easier to pay off down the line. How? By reducing the interest you’re currently paying on your debt.

According to WalletHub, the average credit card interest rate on existing accounts is currently 16.27%, and an even higher 21.34% for new accounts. Those extraordinarily high rates make it harder and harder to pay down what you owe, even when you’re making your minimum payments on time.

So how can you lower your interest to a more manageable level? Believe it or not, the best choice is a somewhat counterintuitive one: opening up a new credit card.

We know what you’re thinking, but hang on! We’re not advising you to open a new credit card to spend more money. Rather, you’ll want to look for a credit card with an introductory balance transfer offer.

Balance transfer credit cards offer a 0% interest rate for a temporary period of time on existing debt that you transfer over from other cards. The introductory period can be anywhere between 12 and 21 months, depending on the card.

By transferring your debt over to a new card with an introductory balance transfer offer, you’ll be stopping the interest on that debt for more than a year. And even if you keep paying the same amount that you’ve been paying each month up until now, you’ll be reducing your debt, because a portion of your payment is no longer going to pay an exorbitant amount of interest.

How can you find credit cards with balance transfer offers? Just check out CNN Underscored’s list of the best balance transfer credit cards and see which card might be right for you.

The good news is that credit card issuers, after being stingy about approving people for balance transfer credit cards during the pandemic, are mostly back to normal at the moment, so it’s easier to get a new card now. But if you get turned down, perhaps due to a low credit score, applying for a personal loan is another option.

The interest rate on a personal loan is likely to be higher than a credit card introductory balance transfer offer, but it may still be better than sticking with the interest rate you’re currently paying. Plus, you don’t have to worry about the interest rate on a personal loan changing after an introductory period, like you do with a balance transfer credit card. It’s also easier to get approved for a personal loan, as there are options for people with all levels of credit, though the worse your credit is, the more you’ll pay in interest for a personal loan.

You can use a personal loan to pay off your existing debt, and with a personal loan, you’ll have a set timetable for paying off your debt in full so it doesn’t drag on forever. But if you’re considering a personal loan, make sure the interest rate on it is lower than what you’re currently paying — otherwise, it doesn’t make sense to switch.

There are other factors to consider if you’re applying for a personal loan, so if you’re thinking about this option, make sure to read our guide on why you might consider a personal loan and how to apply for one. And for more ideas on how to make your debt more manageable in 2023, check out our four steps to getting rid of your credit card debt.

If there’s one thing the last few years have taught us, it’s the importance of having some sort of savings or emergency fund.

Some people say that, as a rule of thumb, you should have three or six months of living expenses saved up. But if you don’t have any savings at all right now, don’t try to accumulate six months of savings all at once. Again, your resolutions should be achievable so you have a good chance of accomplishing them and setting yourself up for future wins.

So instead, make your goal that you’ll start an emergency fund in January and add to it each month in 2023. This could be as simple as putting a jar on your kitchen counter with a slot in the lid and dropping your loose change into it each time you get home. That’s not going to add up to a ton, but it’s still better than doing nothing.

However, an even better strategy is to open a savings account and have a portion of your paycheck deposited into it automatically on each payday. This is a concept known as “paying yourself first,” because you’re putting money aside for yourself each month before you start paying your bills, instead of trying to save whatever’s left over at the end.

You might be thinking that opening a savings account sounds like a hassle, and 20 years ago, it probably meant a trip to the bank and 45 minutes with a bank employee. But in 2023, you can literally do it from home in about 10 minutes with any of hundreds of online savings account options.

Maybe you’re nervous about putting your money with an online bank you aren’t familiar with? Then you might consider an option like the Capital One 360 Performance Savings account, which CNN Underscored recently reviewed. You might find other savings accounts that earn more interest, but if you’re looking for an established company and an extremely easy and quick way to start, it’s a solid choice.

Now, if you’re already spending every dime of your income and aren’t sure how you’re going to find money to put aside for savings, you should take a little time at the start of 2023 to sit down and put together a spending plan.

A spending plan is slightly different from a budget, in that it allows you to choose what you must spend money on each month and then gives you the freedom to do whatever you want with the rest. (Plus, it’s more fun to think about making a spending plan than a budget. Everyone likes spending money, right?)

If you don’t know how to make a spending plan, we’ve got a spending plan guide that will take you through it step by step. And if you’re having trouble finding ways to cut back on how much you’re spending in order to make room to save some money, check out our ideas on how to reduce three of your major household expenses in just 30 minutes.

Credit scores can be scary and confusing, and there’s a lot of misinformation out there about how they’re calculated and what affects them. But the one thing that everyone knows for sure is that higher is better when it comes to your credit score. In modern life, your credit score influences everything from how much you’ll pay for your car loan to whether you can get a mortgage to buy a home.

So how do you improve your score? Well, like everything else on our list, you can’t go from a poor score to an excellent one all at once. But you don’t need to have a perfect credit score to make a difference. While higher is better, even a good score will open new financial doors for you that an average score couldn’t.

Of course, the first step to improving your credit score is knowing what your score is to start. CNN Underscored’s guide on how to check your credit score has several online options, many of which are free and some of which you might already have access to and don’t even know it.

And once you know your credit score, how can you tell if it’s good, bad or somewhere in between? The answer is it depends on which credit score you’re looking at. That’s right — just to make it all more complicated, there are several different credit scoring models that different companies use. But don’t worry, because our guide to what’s a good credit score lays it all out for you.

Once you know your credit score and where you stand, the best way to increase your score in 2023 is to make sure you’re paying all your bills on time each month. Making on-time payments is one of the biggest factors used when calculating your credit score. And if debt is dragging down your score, paying off a portion of it using our tips at the top of this story will help increase it as well.

Finally, while you should be careful of “bad credit repair” services that don’t have a known reputation, one service you can safely use is Experian Boost, which is run by one of the three main credit agencies. Experian Boost can track down a good payment history for services that don’t usually appear on your credit report — such as your utility or streaming service bills like Netflix — and improve your score by adding them to your credit file. And best of all, it’s free.

And one more note: If you’re a renter, consider getting a Bilt Mastercard. You can use it to pay your rent with no additional fees, and earn rewards in the process. Even better, when renting at a Bilt Alliance property, you can choose to have your on-time rent payments automatically reported to the three major credit bureaus, which makes it a great way to build (or rebuild) your credit. Best of all, the Bilt Mastercard has no annual fee.

Here are some of CNN Underscored’s financial resources to help with your New Year’s resolutions:

And you can find all our personal finance stories every day at our CNN Underscored Money hub.

Having a lot of debt makes life harder. Monthly debt payments can eat up way too much of your income, leaving you constantly strapped for cash. Not only that, but having too much debt can make it difficult to build an emergency fund or qualify for a mortgage and other loans, which can mean sacrificing your long-term future.

Unfortunately, debt is something far too many people have in common. According to a recent report from Lending Tree, Americans owed a collective $925 billion on their credit cards as of the third quarter of 2022, and credit cards are charging an average annual percentage rate (APR) of 16.27%, with additional interest rate increases likely in early 2023.

That’s a lot of debt and interest to pay off, but it’s not insurmountable. Fortunately, there are some strategies you can use to pay off debt faster, save money or both. So if you’re hoping to ditch debt and start saving money for the things you really want in 2023, here are six of the best ways to do it.

If you have a bunch of credit cards and you’re only making the minimum payment on them, it’ll take decades for you to get out of debt. This is especially true if you have a high APR on your credit card, and if you’re still using your cards for purchases while you’re carrying debt, it’s almost guaranteed that you’ll never catch up.

Consider this example: Someone who owes the national average credit card balance of $6,569 may have a minimum monthly payment of around $131. If the APR on this card is 19%, it will take 101 months of paying $131 a month before the debt is paid off. That’s more than eight years to pay off the balance, and they’ll pay $6,604 in interest along the way!

But by boosting their monthly payment to $170 per month, they could become debt-free in just 61 months and reduce their interest costs by nearly half, to $3,672. And if they were able to pay $200 per month, they could pay off their balance completely in 47 months and pay just $2,777 in interest.

If you’re juggling multiple credit cards that you owe money on and feeling overwhelmed, one way to manage them all is to consider creating a “debt snowball.” With this debt repayment method, you’ll make the minimum payments on all your largest debts, then funnel any extra money you have toward your smallest debt each month. As the smallest debt gets paid off over time, the money that was going toward that debt is “snowballed” into paying off the next-smallest debt, and so on.

The debt snowball method can be advantageous since it helps people get rid of some of their smallest bills right away. This can help build momentum during the debt repayment process, and it reduces the number of monthly bills you need to pay as you go.

The “debt avalanche” method is basically the opposite of the debt snowball. With this strategy, people make the minimum payments on all their debts, then funnel any extra money they have toward their debt with the highest APR. Debts with the highest APRs are wiped out over time, at which point individuals “avalanche” those payments toward the debt with the next-highest APR.

This debt repayment method helps save on interest since you’re paying off your highest-interest loans and credit cards first. However, it often leaves users paying a higher number of bills for longer, since it focuses on APRs instead of balances owed. Both the debt avalanche method and the debt snowball method are good ways to climb out of debt — it’s just up to you which one you prefer.

Another way to quickly pay off debt involves applying for a debt consolidation loan. With this debt management strategy, you use a personal loan to pay off all your other existing debts. This lets you ditch high-interest credit cards and other high-interest debts while trading them in for a single loan with a fixed interest rate and a fixed monthly payment.

When you consider that personal loans often come with no annual fees, no origination fees and fixed APRs as low as 6%, this strategy can be used to get out of debt faster and save money along the way. Going from multiple bills each month down to just one can also make budgeting significantly easier.

A second debt consolidation method involves signing up for a balance transfer credit card. With this type of credit card, consumers can get a 0% APR on balance transfers for as long as 21 months. A balance transfer fee (usually 3% to 5%) applies, but having that entire time with zero interest makes it easy to pay down debt considerably faster. After all, every cent paid toward debt at a 0% APR goes directly to whittling down your balance.

While balance transfer credit cards can help consumers save big on interest, remember that 0% APR offers don’t last forever, and if you haven’t cleared your debt before your introductory offer expires, you’ll pay a high variable APR after your promotional period ends.

Earning more money is another strategy that can help pay down debt faster, although this step is often easier said than done. You may not be able to pick up more hours at work, or a raise may not be in the cards (though given recent inflationary trends, this is the year to ask for one). But in many cases, the best way to earn more income involves picking up other types of work. Perhaps you can work on a “side gig” in your spare time, become a part-time consultant in your field or apply for a second job on top of the one you have.

Whatever you do to boost your income, the key to maximizing your efforts is throwing all your extra cash toward your debts each month. If you work extra hours and spend that money instead, you’re not going to get out of debt any faster. But if you put the extra money into paying off debt, you’ll improve your debt-to-income ratio and make it easier to save money and qualify for the best financial products in the future.

Earning more money can definitely help you pay off debt faster, and the debt snowball and avalanche methods can help you reduce your bills quickly or optimize your interest savings. However, debt consolidation is a different situation altogether, since you’re trading in your current debts for a new loan or balance transfer credit card with different terms.

Generally, debt consolidation can be a good idea, but it all depends on how it’s done. For example, consumers who consolidate debt with a plan in mind can do well paying off their bills at a lower APR (or zero interest), and can also save time with a shorter loan term.

However, debt consolidation comes with risks, mostly because it opens the door to racking up more debt over time. We say this because debt consolidation lets you transfer all your debts to a new credit card or personal loan, which means all the cards that previously had a balance suddenly are empty and available again.

So if you decide to consolidate your debts, make sure you don’t use it as an excuse to start overspending on your newly available credit cards. While canceling a credit card can hurt your credit score by reducing your available credit, it’s probably not a bad idea to put those unused cards in a sock drawer so you aren’t tempted to run up additional debt while you’re still in the process of paying down your existing debt.

Any of the six methods outlined here will help you pay off your debt faster and get yourself on a sound financial footing. But regardless of which debt repayment strategy you pick, there’s one simple, golden rule you should remember, no matter what.

If you want to get out of debt, you have to stop digging.

By and large, this means being disciplined with your credit cards moving forward. Only spend what you can afford to pay in full every month on a credit card and nothing more. If you feel that having a credit card is going to be too tempting, putting an end to credit card use altogether — at least until you’re debt-free — and focusing on using cash or debit cards in the short term could be the best debt reduction strategy of all.

Need help getting rid of debt? Find out which cards CNN Underscored chose as our best balance transfer credit cards currently available.

Get all the latest personal finance deals, news and advice at CNN Underscored Money.

As of March 24, the Internal Revenue Service (IRS) had issued more than 59 million tax refunds with an average refund amount of $2,903. That’s down about 11% from last year’s average tax refund of $3,263, but it’s still a big enough amount for most taxpayers to find a productive use.

A refund in this range used wisely could be enough to jump-start a savings plan or help someone save thousands of dollars in interest payments on debt, but that’s only if the money is used wisely before it gets frittered away or spent on groceries and regular bills.

If you’re looking for a way to use your tax refund for maximum impact, here are some of the best options to consider in 2023 and beyond.

With interest rates rising throughout 2022 and into 2023, credit card debt and other variable debts are now more costly than they have been the last few years. For example, recent stats from the Fed showed the average credit card interest rate on accounts it assessed worked out to 20.40% at last count, compared to 16.45% throughout 2021 and 16.28% in 2020.

If you have credit card debt at rates in this range or anywhere close, using your tax refund to pay it down or completely off can leave you with fewer bills and lower interest charges. For example, a $3,000 credit card balance at 20.40% with a minimum monthly payment of $60 would require payments for 113 months with $3,752 in interest charges tacked on along the way.

Beyond credit cards, you may want to make progress on high-interest auto loans, personal loans or any other outstanding debt with a high interest rate. Doing this could put you in a better place financially, and your future self will thank you.

If you can’t pay down all of your credit card debt at once, you can use your tax refund to cover a portion of it. Then, you might consider opening a balance transfer credit card to refinance the rest at a promotional 0% interest rate. Cards like the Citi® Diamond Preferred® Card offer an introductory 0% APR for 21 months (17.74% to 28.49% variable APR afterward) on balance transfers.

While rising interest rates can make carrying debt costly, they can also help you beef up your savings. The fact is, a range of high-yield savings accounts and certificates of deposit (CDs) are offering some pretty good rates right now with no fees attached.

As an example, you can get a 10-month CD right now through Marcus by Goldman Sachs with a 5.05% APY as long as you have at least $500 to stash away. Further, many of the best high-yield savings accounts are offering high interest rates too, like the CIT Bank Savings Connect account, which currently offers a 4.5% APY on deposits.

Maybe you’re happy with your debt levels and short-term savings but you want to get ahead for retirement. You can always increase the percentage you’re contributing to a workplace retirement account or contribute to a traditional or Roth IRA if you meet eligibility requirements.

In 2023, most people can contribute up to $6,500 across all IRA accounts. The exception is for people ages 50 and older, who can contribute an extra $1,000 for a maximum of $7,500 this year.

Just remember that income limits cap who can contribute to a Roth IRA directly, so you may be prevented from doing so if you are married filing jointly with an income over $214,000. You may also be stuck contributing a reduced amount if you are married filing jointly with an income from $204,000 to less than $214,000. Other income caps and phase-out periods apply to single filers, heads of household and qualifying widowers.

And while anyone with earned income can contribute to a traditional IRA, contributions are only tax-deductible for people who meet certain criteria and/or income requirements.

With Biden’s student loan forgiveness plan still up in the air, it never hurts to start saving for college now if you have the means.

Many states offer tax advantages for contributing to a 529 college savings plan, and it’s possible to invest the money in underlying funds so it can grow and compound over time. As an example of tax advantages, the state of Indiana offers a 20% tax credit on the first $7,500 you contribute to a 529 plan in 2023.

If you’re worried about overfunding for college, you should know that the Secure Act 2.0 has some built-in relief here starting in 2024. Specifically, people with a 529 plan open for at least 15 years will be able to move up to $35,000 in unused 529 college savings plan funds to a Roth IRA for the beneficiary (subject to annual contribution limits).

Buying life insurance is something that’s easy to put off, but it can easily cost you less than what you would pay for a dinner out each month. With your tax refund money safely in your account, it definitely makes sense to price out coverage for yourself and a spouse “just in case.”

As an example, a company called Bestow lets you purchase inexpensive term coverage to protect your family with the potential for no medical exams required. Coverage is available in amounts from $100,000 to $1.5 million, and you can apply if you’re ages 18 to 60. Best of all, term life insurance rates from Bestow start at just $11 per month.

Shop for term life insurance and get offers from multiple insurers at once with Money.com.

Investing in yourself can look different depending on your goals, and you can choose to focus on your professional life or something else entirely. For example, the average tax refund could be enough for a few years of gym membership or even a home gym so you can finally get in tip-top shape. You could even invest in a new wardrobe or the dental work you’ve been putting off for a few years.

On the professional side of things, you could spend the cash on membership in a mastermind group, a certificate program or another kind of formal education. The average cost of one year of community college is not likely much more than the average tax refund at $3,860 for in-district tuition for the 2022 to 2023 school year, so that’s an option too.

While your tax refund is really just your money that you overpaid to the government, there’s nothing wrong with setting some of it aside for something you really want. Maybe it’s that vacation you’ve desperately needed the last few years, or perhaps a new mattress, home decor or a new laptop for the kids.

Ideally, you can spend some of your tax refund on something that helps you get ahead while also reserving some cash for a purchase or experience that makes you happy. “Everything in moderation,” as they say, and there’s more to life than taxes and bills anyway.

Get all the latest personal finance deals, news and advice at CNN Underscored Money.

Spring is here, and that means it’s time to clean out your flower boxes and fertilize the lawn. However, the earliest parts of the year are also a good time to “spruce up” your financial life, particularly if you feel like you can’t get ahead or don’t have financial goals on your road map.

How can you spring clean your finances? Pretty much any step you take to save more, spend less or plan for the future can leave you better off next year than you are now. That said, the experts we interviewed suggested strategies like poring over your bank statements, rolling over old retirement accounts, getting a handle on your debts and checking your credit reports to get yourself in the best possible shape.

And while personal finance may not be a ton of fun, that makes it a lot like spring chores. We may not relish in seeding the lawn or laying mulch, but most of us do it anyway. Here’s a rundown of ways you can improve your financial life this spring.

If you’re chasing financial freedom but can never seem to get ahead, now is as good a time as any to look at your average spending to see if you can make some cuts. Financial planner Kurt Heineman of Vision Casting Financial Planning says he recommends starting with the purchases you have made over the last few months by pulling out your bank statements and credit card bills and reviewing your spending.

As you review all your regular purchases, see if there are any subscriptions you no longer need or even have duplicates of. “This is a simple way to reduce your spending by potentially hundreds of dollars a month,” says Heineman.

Other spending habits that could need the ax (or at least some trimming) include money spent on dining out or entertainment, frequent online shopping or even hobbies that add up quickly in cost without you realizing it.

Either way, you won’t know how much you’re really spending each month unless you check, so that’s where you’ll want to start. Then, look at where you can make some cuts.

If you really want to clean up your spending this spring, you can dive into the world of budgeting and start giving each dollar you earn a “job.” This advice comes from Jesse Mecham, who is the founder of the money management app YNAB.

Mecham says that, instead of using your bank account balance to dictate your spending habits, you should create a plan for how you’ll spend every dollar you earn.

“This will encourage you to be a more conscious spender and empower you to stretch your money further,” he said.

You can use the YNAB app to make a monthly budget you can stick to, and this app will also help you track your spending in one fell swoop. You might also consider free budgeting apps like Mint, or even the traditional pen-and-paper budgeting method where you write your expenses in one column and try to stick to set spending limits throughout the month.

Automate and beef up your savings

While using a budget can help you organize your income and spending in a way that makes sense, financial planner Ksenia Yudina of UNest adds that you may get even further ahead financially if you automate your savings each month and set financial goals.

“Spring is a great time to look ahead and determine your short-term and long-term financial goals like buying a new house, saving for vacation, getting a new car or remodeling your existing home,” said Yudina. “Once you figure out your goals, you can start monthly contributions into your savings or investment account to make sure you achieve them.”

Fortunately, many major online banks let you set up automatic transfers to savings that take place on a given day of the month. You can also use an app like Acorns that automatically rounds up all your purchases and invests the money on your behalf.

In the meantime, spring is a good time to look at your emergency financial reserves to see if they’re enough for your needs. Mecham says that, between the pandemic, inflation and a potential recession, having an emergency fund is increasingly important.

“Protect your future self from these uncertainties by prioritizing any extra dollars you have for your emergency fund,” he said.

If you’re looking for a place to store your cash savings, you might consider a high-yield savings account due to high interest rates. For example, the CIT Bank Savings Connect account offers 4.5% APY on cash savings with no fees.

With workers changing jobs more frequently, layoffs from COVID-19 and current layoffs playing out all over the country, financial planner Vincent Grosso of Pascack Capital says now is a good time to consolidate multiple retirement accounts you may have from previous jobs.

This step can help you simplify your finances by moving all investments to a single place, and you can consolidate several into a new brokerage firm that may have lower fees or better investment choices.

If you want help consolidating old 401(k) accounts, a financial advisor can assist you through the process. However, you can also roll over your old retirement accounts to a new IRA yourself with brokerage firms like Vanguard and Fidelity.

Related: Just got your tax refund? Here are 7 smart things you can do with it

Interest rates have been inching higher for more than a year, which is yet another reason you should take stock of your debt levels and look for a solution. If you have credit card debt with anywhere close to average APR of 20.56%, taking a few simple steps can help you save money, pay down debt faster or both.

Financial planner Jordan Taylor of Core Planning says high interest credit card debt can easily cost you two to three times the amount you originally borrowed, and that consolidating debt could get you a lower interest rate, a better monthly payment or all of the above.

While using a personal loan to consolidate debt can help you secure a fixed interest rate and fixed monthly payment, you can also look into balance transfer credit cards like the Citi® Diamond Preferred® Card. This card currently offers a 0% introductory APR on balance transfers for 21 months (17.74% to 28.49% variable afterward). Transfers must be made in the first four months from account opening to qualify for this rate.

Check your credit reports for errors

Your credit score is a crucial component of your credit health, and your credit reports are the one place you can spot potential problems (or even errors) early on. That’s why Sam Weisfeld, managing editor at FinImpact, says it’s crucial to check your credit reports for errors at least a few times per year.

Fortunately, you can check your credit reports with all three credit bureaus — Experian, Equifax or TransUnion — for free once per week this spring (or any time throughout the year) at AnnualCreditReport.com. Doing so can help you find errors that may be hurting your score through no fault of your own, or even some of the earliest signs of identity theft. And don’t worry, it doesn’t hurt your credit score when you check your credit.

If you find errors or incorrect information on your credit reports, you’ll want to follow the Federal Trade Commission (FTC) guidelines on disputing these issues right away.

According to the Consumer Financial Protection Bureau (CFPB), some of the most common credit report errors to look for include incorrect balances, falsely reported late payments, accounts you don’t recognize, accounts reported open that are actually closed and accounts listed more than once.

Related: What’s a good credit score?

Spring is here, and it’s a great time to refresh your finances. The steps outlined here can help you get a headstart, and that’s true whether you’re new to personal finance or you always have your head in a finance book.

Don’t wait another year to get your money organized, and your future self will thank you.

Check out CNN Underscored’s list of the best credit cards currently available.

Get all the latest personal finance deals, news and advice at CNN Underscored Money.