Pay Off Your Debt

NerdWallet's debt guide can help you diagnose your situation, pick a payoff strategy, track your progress and build a financially healthy life.

Let’s start with the basics. You have two options for tackling debt:

  • Do it yourself with debt consolidation, targeted payment strategies and better budgeting
  • Seek debt relief through options such as a debt management plan or bankruptcy

You can diagnose your situation, choose a strategy and execute it using this four-step process:

1. See what you owe

2. Assess your cash flow and credit

3. Pick a path that works

4. Track your progress

Step 1: See what you owe

Focus on higher-interest debts, the kinds most likely to cause worry: credit cards, medical debt, payday loans. Your mortgage, student loans and car loan tend to have lower, often fixed, interest rates.

Review your credit reports, which list many accounts, such as credit cards and personal loans. Then look through other financial records to find things that aren’t on your reports, such as medical debt.

Make a list of balances owed, along with the interest rate and monthly minimum. The downloadable worksheet at right will help.

Error in Your Credit Report? Here's How to Dispute It

How to use AnnualCreditReport.com

Have you checked your credit reports lately? You’re entitled to get at least one free copy from each of the three major credit bureaus every 12 months.

MORE: Learn how to read your credit reports

Worksheet-small

Download a debt worksheet

Use this interactive worksheet to get a handle on how much you’re paying now, when you’ll finish paying — and whether you can get there faster and cheaper by tweaking your approach.

Step 2: Assess your cash flow and credit

You need to figure out how much money you can put toward debt after paying living expenses. Get a handle on your minimum monthly obligations with this calculator »

Next, get your free credit score if you haven’t already.

Your available cash flow and credit score will determine your options for debt payoff.

Before you jump to the next step, see if you can gain some wiggle room with these resources:

  • Pump up your credit. Find out where you stand — and what better credit can do for you. Building your credit can save money. Sometimes it’s as easy as fixing errors on your credit report.
  • Build an emergency fund. An amount as low as $500 can insulate you from financial shocks, so you don’t add more debt when an unexpected expense hits.
  • Start saving whatever you can. Even small amounts add up. These tips can help you set goals and a budget, then build a financial cushion.

Step 3: Pick a path that works

We’ll help you run the numbers and see what makes sense. The amount and type of debt you have will help pinpoint a strategy. Options include do-it-yourself methods, a debt-management plan or bankruptcy.

4 Ways to Find Debt Relief

4 ways to find debt relief

The routes range from making a do-it-yourself payment plan to getting help from a credit counselor or consulting a bankruptcy attorney.

Should I Consolidate Debt With a Personal Loan?

How to consolidate credit card debt

You may be able to consolidate several higher-interest debts into a single lower-interest loan, to help you pay off the balance faster. Find out how it works and whether it’s for you.

Step 4: Track your progress and plan for life after debt

Watch as your debt dwindles, and celebrate your victories along the way. You are changing your financial future.

Cutting debt down to the good types, like a manageable mortgage, is key to a financially healthy life with less worry and more opportunity. Not sure what that looks like? We have an eight-question quiz to find your Financial Health Score and master your money.

FINANCIAL HEALTH SCORE

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