About 4 out of 5 Americans are in debt, and more than a quarter have no plans for how their debt will be repaid, according to a recent Lending Tree survey. Household debt totals around $12.84 trillion in the United States, and if you’re one of the millions with credit card debt, personal loan debt, medical debt, and car loans, you’ll want to make a plan to become debt-free – unless you enjoy paying thousands in interest.
To get a handle on your debt, make a list of all you owe. Use your credit report, pulled for free from Annual CreditReport.com,to get a complete list of creditors. Check statements or online accounts to find the interest rate and total amount due, then determine which debts to payoff early. While repaying a mortgage or student loans early may not make financial sense if you prioritize investing instead, getting rid of high-interest consumer debt ahead of schedule will save you a fortune.
Calculate how much you can pay towards debt each month – which will ideally be more than minimum payments – and develop a plan to become debt free. The debt snowball method of paying off your lowest debt balances first is an effective way to stay motivated.