Build a Debt Repayment Plan That Fits Your Life

Gather your latest statements and list each debt’s current balance, interest rate, minimum payment, and due date. Use the figures on your statements rather than estimates from memory. If an interest rate can change, note that too, so you know to review it again later.

Next, add up essential monthly costs such as housing, food, utilities, transportation, and required minimum debt payments. Look at irregular expenses as well: a car repair or annual bill can disrupt a plan that commits every remaining dollar. Only after accounting for those costs can you choose a realistic extra-payment amount.

If you already cannot cover minimum payments, do not build a plan around extra payments. Address the immediate shortfall first. Contact creditors promptly to ask what assistance or payment options may be available, and keep notes about any terms you discuss.

With highest-interest first , you put affordable extra money toward the debt with the highest rate, which may reduce interest costs. With smallest-balance first , you target the lowest balance, which may give you an earlier account payoff and help you stay motivated. Neither method guarantees a payoff date or savings amount.

Keep required payments on every account. When your priority debt is paid off, choose the next one. The right order is one you can maintain without cutting into necessities.

Check the product’s listed specifications when evaluating choose a payoff order you can follow.

Choose an extra payment only after essentials, minimums and room for irregular costs are accounted for. If your income varies, decide what is affordable each pay period rather than committing to an amount that may not be there.

Set reminders around your pay schedule. If an automatic payment could overdraw your account, review your balance before paying instead. Once a month, update your balances and adjust the plan when income or expenses change.

When you sort necessities from purchases that can wait, our fashion guide bundle is an optional purchase—not a step you need to take to repay debt.

Check the product’s listed specifications when evaluating make the monthly amount realistic.

If you cannot cover required payments, do not plan around extra payments. Contact creditors promptly to ask what assistance or payment options may be available, and keep notes on any terms discussed. Seek reputable consumer guidance before taking on a new obligation whose costs you do not understand, and be cautious of debt-relief offers promising fast or guaranteed results.

If payments remain unaffordable after you review your budget, speak with creditors and seek reputable consumer guidance before taking on a new obligation whose costs you do not understand. The Consumer Financial Protection Bureau’s credit card resources and the Federal Trade Commission’s guidance on getting out of debt are useful places to learn about your options. Scrutinize debt-relief offers carefully, especially promises of fast or guaranteed results.

For today, make the first action small: gather your statements and write down every balance and minimum payment. You can choose the payoff order next.