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If it feels like debt has taken over your life, you’re not alone. And while it might feel like that debt is controlling your finances, you can take control back… conquer that debt… and get your financial life on a better track.

Overwhelming debt can take a huge toll on your monthly budget, your stress levels, and your financial future. And while paying off your debt is a great goal, taking control of your debt has to come first. That’s especially true if you’ve been skipping payments (for any reason).

According to Nerdwallet, American households have $13.86 trillion of debt as of Summer 2019.

The first step toward debt control involves looking closely at how much you owe. It’s hard to do this, and it can bring up some negative emotions (guilt, shame, fear, anger). Try to not blame or judge yourself (hard to do, I know) for having this debt. It’s already there. Shift your focus to moving forward financially so you can dig yourself out of debt.

Every financially forward step you take here is a victory. Making all of your payments on time counts as a win. Not adding to your debt – another win. Paying extra on a single debt – a big win. Give yourself credit for these accomplishments. That positive momentum can power your drive to get this done, even if it takes a while.

Create a Debt Inventory

The first thing you’ll need to do is a debt inventory. That means gathering up your statements for every debt you have:

  • student loans
  • credit cards
  • car loan
  • mortgage
  • home equity loans or lines of credit (HELs or HELOCs)
  • medical bills
  • personal loans
  • any other debts you have

When you have all that info, list each debt with the following information:

  • Creditor (who you owe the money to)
  • Total balance due
  • Interest rate (if it’s an adjustable rate, use the current rate)
  • Monthly payment (use minimum payment for credit card and HELOCs)
  • Payment due date

Once they’re all listed, total up the monthly payments (you can also total the balances, but you don’t have to). This lets you know your minimum monthly debt payment.

If you can’t afford to pay the total minimum monthly debt payment, there are things you can do to make it more manageable – earning extra income, cutting back on some expenses, or working with creditors to lower your payments (good for the short term, but bad for long-term financial fitness). You can learn more about all of these options in my upcoming book, Debt 101, now available for pre-order.

Focus on Debt Paydown

When you have a lot of debt, looking at the big picture can paralyze you. That’s why you’ll go small, and focus on dealing with a single debt. When that one is paid off, you’ll choose another debt to focus on… until they’re all gone. Once they’re all paid off, you can switch your focus from paying down debt to building up wealth.

There are some different methods to use for choosing your focus debts, but the most common are snowball and avalanche.

With snowball, you organize your debts from smallest balance to biggest balance, and pay off the smallest debts first – one at a time. This way you get quick wins to build up momentum (this way works better for me – I love to cross things off lists).

With avalanche, you prioritize your debts by interest rate, and pay off the debts with the highest rates first. Doing it this way will save you the most money interest, especially if your larger debts also come with higher interest rates.

You can use one of those methods, or make up your own. As long as you work toward paying off one debt at a time, you’ll get this done. No matter how you decide to choose to prioritize your debt, make sure to:

  • Choose a single “focus” debt to pay off
  • Make on-time minimum payments for all of your debts every month
  • Find extra money wherever you can to put toward that focus debt
  • When your focus debt is paid in full, move on to the next one
  • Add the money you’d been paying to the previous debt to the new focus debt payment

By using the “going small” strategy, you’ll be able to track each debt as it gets paid off. You can also use some add-on strategies to help you get going, like changing your student loan payment plan or transferring high-interest credit card debt to a 0% interest card.

How to transfer credit card balances the right way

If you know for sure that you can be really disciplined, you can speed up this paydown process by transferring some (or all) of your high-interest credit card debt to a zero-balance card. That sounds like a no-brainer, but this strategy calls for some research and planning to avoid some pretty nasty pitfalls.

A balance transfer can help you eliminate high-interest credit card debt… but only if you handle it the right way. This strategy can help you pay your debt down faster and let you save hundreds – or even thousands – of dollars in credit card interest. Here’s how it works: You get a new credit card that has a 0% (or a very low) introductory interest rate for at least one year, preferably one that doesn’t charge balance transfer fees (but those can be hard to find). Then you transfer your high-rate credit card debt to the new card. Now you have a full year without having to pay any interest charges, which lets you pay down the balance much faster. You can find reviews of the best balance transfer cards here.

The downside: There are some big (possibly expensive) traps here, but you can avoid all of them with careful planning:

  1. Figure out how much you need to pay every month in order to have the balance paid in full before the introductory rate period ends. Make that payment a budget priority.
  2. Automate the monthly payment you calculated to make sure it’s never late.
  3. Never skip a payment or make a late payment on the balance transfer card or you will lose the low introductory rate.
  4. Never use the new card for purchases. Any payments you make will go toward the new purchases first, and not toward your transferred balances, which could put your introductory rate in danger.
  5. Pay off your full transferred balance before the introductory period expires or you will have to pay interest on the remaining balance, possibly all the way back to the date of the transfer.
  6. Don’t cancel your old credit cards. Doing that can hurt your credit score.
  7. Don’t build up new debt on your other credit cards.

If you stick strictly to those guidelines, you’ll be able to pay off your high-interest credit card debt years earlier… and save a lot of money in the process.

Managing Your Monthly Student Loan Burden

If you can’t afford to make your student loan payments, you may be able to lower them. This will probably cost more money in the long run, but it’s better than skipping the monthly payments. Doing that only increases your loan balance (they add all the unpaid interest on to the amount you owe) and trashes your credit.

When it comes to lowering your student loan payments, you have three main options:

1. Pick a different repayment plan. If you have federal student loans (and most people do), you’re automatically signed up for the standard repayment plan. But if you’re struggling with those payments, you may qualify for a different plan. For complete details on all of the repayment plans, go to

2. Consolidate your federal student loans. You make your life easier by combining multiple student loans into one federal Direct Consolidation Loan. The new interest rate will come out to the same overall rate you were paying before (they use a weighted average), so you won’t save money there. But going this route can reduce your total monthly payment and keep you eligible for other benefits associated with federal loans (like income-based repayment plans and public service loan forgiveness (PSLF), which aren’t available with private loans). It also makes it easier for you to make sure you’re never late with a payment (easier with one payment than a bunch of payments).

3. Refinance your student loan debt. Right now, interest rates on federal undergrad loans are around 4.50%. If the rates on any of your student loans are much higher than that, look into refinancing them – especially if you have a good credit score now. Lower interest rates mean lower payments, and that can help you pay off your student loans more quickly. Plus, you can choose a longer loan term, which lowers your payments even further – but that comes with a catch. A longer loan term can be better for your current cash flow, but worse for your long-term finances because you’ll pay more interest over the life of your loan. Check out this Nerdwallet guide for comparing student loan refinancing deals.           

4. Get help if you need it

Need help working on your debt paydown plan? Consider talking to a reputable credit counselor, someone who can help you work with your creditors, develop a debt-focused budget, and organize your finances.

BUT there are a lot of scams floating around the credit counseling world (especially among the ones that talk about credit repair or debt relief), so do some checking before you sign anything. You can find a list of trustworthy credit counselors here.

If you don’t need the full-on help of a credit counselor but could use an assist figuring out your plan, contact me here. Together, we can map out your debt-free plan and set you on the path toward financial freedom.