Steps For Paying Off Your Debts

Remember, focusing on paying off your debts is Step 3 of your Financial Priority List. That
means at this point you should have a clear monthly budget and 1-3 months worth of bills
saved before you start tackling your debt.

Step 1 Step 2 Step 3 Step 4 Step 5

Continue to Figure out Pick debt Track
List out all make all extra payment progress
your debts minimum payment strategy each month
payments amount

List out name,
minimum payment,
balance, and interest
rate.
Whether you’re When you’re focused There are 2 popular Tracking your
focused on savings or on paying down your debt payment progress and
paying down debt, debt, 100% of your strategies. Pick one celebrating your wins
you always want to working capital will go and follow it. are key to paying off
continue to make all towards an extra debt your debt quickly.
(See next few pages)
your minimum payment each month.
payments.
Debt Payment Strategies
These are the two most popular debt payment strategies. It’s best to pick the method that
will keep you most motivated and focused. It’s your behavior that will ultimately decide
how quickly you get out of debt.

Debt Snowball Method Avalanche Method

The debt snowball method is a debt The avalanche method is a debt

payment strategy where you pay off the
smallest to largest balance.
Starting with lowest balance first gives
you a win quickly and the motivation to
keep going. While this method could cost
you more in interest, staying motivated
will ultimately be the best savings plan.
reduction strategy where you pay off
your debts based on highest to lowest
interest.
By starting with the debt with the highest
interest you can save more money.
However, if this is a larger debt, gaining
that first win could take some time
impacting your motivation to keep going.
 The “Pros & Cons”

• Review the pros and cons of each

strategy
• List out your debts for both
strategies and see if one makes
more sense for your situation and
goals.
• The biggest key to success is
sticking to a plan and seeing it
through.

Source; Your Money, Your Goals: A Financial Empowerment Toolkit

Debt Payment Methods:
Additional Tools

Debt Snowball Method

• NerdWallet
• Clever Girl Finance
• Dave Ramsey

Avalanche Method

• NerdWallet
• Experian
• Student Loan Hero
Other Debt Management Options:
• 0% balance transfer credit cards: These are credit cards
that give you 0% interest on all the debt you transfer from
another credit card for a specific amount of time. This can
be a good option for people with debt that could take a
few years to pay off. Usually, you need a credit score of
over 710 to take advantage for this option.
• Personal Loans: With a high credit score you can look at
getting a personal loan to pay off your credit cards.
Usually, the personal loan is at a lower interest rate then
your credit cards. It can also help consolidate maybe 2-4
credit debts and payments into 1 personal loan. Without a
clear budget and payment plan, people who pay off credit
card debt with a personal loan often find themselves back
in credit debt within 1-3 years, so use caution with this
option..
• Negotiate your debt: You can always call your debtor and
try to negotiate a smaller payment or even a smaller payoff
amount. Often you must be 6+ months behind on
payments to start this long process.