“Getting your credit report out is probably the fastest way to find out what you owe because you can’t hide from your credit report,” says Rodriguez.
Using a spreadsheet, pencil and paper, or a debt repayment app, list your debts. Include the balance, interest rate, and minimum monthly payment for each. Make sure you factor in all forms of debt like buy now, pay off loans later.
Next, take a look at your income and expenses to see how much money you can invest to get into debt and where you can reduce your expenses. If you’re spending more at restaurants than six months ago, for example, try cutting that down to free up money to pay off debt.
Then choose a strategy to pay it off. Here are some common tactics:
Debt Snowball: With Debt Snowball, you first channel your debt-paying energy to the smallest balance while making minimum payments on the rest. Once the smaller debt is eliminated, roll the amount you paid onto the next smaller debt. As you clear your debts, the payment amount continues to grow like a snowball until you are debt free.
Debt Avalanche: With this method, you first pay off the debt with the highest interest rate. Then, as with the debt snowball method, once this is paid off, you transfer the payment to your debt with the next highest interest rate.