The faster you pay your debts:

• The less interest you’ll pay.
• The quicker you’ll be debt-free.
• The more hard-earned money you’ll have to spend or save as you see fit.

So make a plan:

• Check the rates you’re paying.  There could be a better deal out there.
• Make a budget and determine how much MORE you’ll use each month to pay down your debts.  Use our Figure Out a Budget in 3 Minutes to make a basic budget.  It’s all most people need.
• Determine which debt you’ll pay down first and which you’ll pay down next.
• Then pay down your debts! And keep your statements & track your progress – to stay motivated & get where you want to go.

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Compare what you pay to rates advertised on-line, in newspapers and magazines.  Ask friends and family what they pay.

If you are paying high rates on auto, student, or credit card loans, consider consolidating your debt

• If you think you are paying too much, get your credit score – your credit score matters.  (See How To Improve Your Credit.)  Then find out the interest rates charged for people with scores in your range.
  • If you can improve your credit score, do that right away!
  • If you are paying too much, call your lender and see if you can get a lower rate.  Ask to speak with a supervisor if you can’t get anywhere with the first person you speak with.
  • If you can’t negotiate a lower rate, consider switching lenders.
• If you have a hardship, ask your lender or a legitimate credit counselor about
  • Forbearance. A plan that freezes your account and sets up automatic monthly payments.
  • Debt Management. Where you work with a credit counselor.
  • And watch out for debt-collection scams that prey on people in financial trouble.
• If you are paying high rates on auto, student, or credit card loans, consider consolidating your debt in a lower-interest home equity loan or by refinancing your mortgage.  Your new interest rate should be lower and tax-deductible.  But know if you can’t make the payments, you could ruin your credit AND lose your house. See Learn About Home Equity Loans & Lines of Credit and Figure Out “If You Refinance …”

Are you paying too much? What Americans paid in interest last year:

General Rules

• Pay off debts handled by a collection agency – your credit is at risk.
• Don’t fall behind on any debts – pay at least the “minimum due” to ward off collection agencies.
• Try not to add more debt – even more low-interest debt.

Two basic strategies.  Pick the one that makes most sense to you:

• Pay off your smallest debt, then the next smallest, then the next.  You’ll soon have fewer bills and creditors, and see “light at the end of the tunnel.”
• Pay off the debt with the highest interest rate, then the next highest, then the next – and don’t reduce the amount you use to pay down debts until you’re “out from under.” It’s the quickest & cheapest way to pay off what you owe.

To see how fast you could be debt-free, CLICK HERE. 

Even though you’re paying down debt, you might borrow to buy a house or a car, or even charge day-to-day expenses on a credit card.

So keep yourself from borrowing stupid, Learn About Borrowing Smart.

Print out this How-To and put  reminders in your calendar to help you move from How-To to Done!