According to Experian’s 2019 Consumer Debt Survey, Americans carry an average of $90,460 in personal debt, this includes revolving debt, housing-related debt, and consumer loans.

Your Payoff Plan of Attack

Many people are eager to know the “best” way to get out of debt.

However, because everyone’s circumstances are unique, the best way is really the way you find that keeps you motivated and are able to stick with long-term.

Your debt payoff strategy may change as your circumstances change, so it’s important to reevaluate your plan periodically.

With that said, here are a few approaches to consider:

1. Stop accruing new debt

The first step in paying off debt, is simply to stop accruing new debt.

You want to dig out of a hole, not keep digging in.

Create a budget that covers all of your essential spending categories and allows you to pay the bills without relying on credit cards.

2. Try Dave Ramsey’s debt snowball method

One approach is to pay off your debt in order of smallest to largest balance, gaining momentum as you bring each credit card or loan balance to zero.

Once your smallest debt is paid in full, you roll the money you were paying on that debt into the next smallest balance, and so on.

For example, let’s say you have three outstanding debts: $1,000 vet bill, $2,000 Visa bill, and $5,000 car loan. You would make the minimum payments each month on the bigger two and put all of your extra cash toward paying off the vet bill first.

Then once that is paid off, you put all your extra money toward the Visa bill until that is paid off. Last, you would pay down the car loan.

This is the best way to feel accomplished. It’s setting yourself up for small wins early and increasing your motivation to continue tackling larger and larger debt.

3. Consider the avalanche method

Another approach to paying off debt is by identifying the interest rates on each of your debts and paying off the highest interest rates first.

You’ll likely save the most money with this approach because the balance with the highest interest rate will cost you the most in interest payments in the long run.

This method makes more sense on paper, but it may not allow the feeling of accomplishment the debt snowball provides.

4. Negotiate better deals

You may think your interest rates are set in stone. But there may be some wiggle room.

Try asking if you can pay a percentage of the debt off in one chunk in exchange for having the remaining debt forgiven. Medical debts tend to be more negotiable than other debts, like government-held student loans or car loans.

You’ll never know until you ask, so why not try?

5. Transfer high-rate balances

If your credit card debt is overwhelming, look into a card with a 0% interest rate so you can do a balance transfer.

Transferring your current debt to a card with a lower rate will help you pay it off faster and pay less in interest.

However, there may be a fee to make the balance transfer, which usually is a percentage of the balance being transferred.

Make sure you do the math before you switch. It may be worth it to transfer to a slightly higher rate card (say 1%) if it has no fees versus a 0% card with a high-balance transfer fee.

More importantly, you’ll also want to make sure the teaser rate you’re getting for the transfer is good for long enough for you to pay off the balance.

Oftentimes, you’ll have 12-18 months, and you can make a significant dent in your debt in that amount of time.

Finally, keep in mind that a balance transfer will only be successful if you don’t start charging again on the original card.

You want to keep that card at a zero balance to bolster your credit utilization ratio.

6. Seek help from trusted resources

When you’re drowning in debt, it’s common to feel like you’re struggling alone on an island — but it doesn’t have to be that way.

There are many resources available, such as:

• A debt consolidation loan: Combining two or more payments into a single, fixed monthly payment makes it easier to budget and manage finances. Of course, you’ll want to make sure the interest rate for the consolidation loan is lower than the combined average interest rate of your credit card payments; that’s the only way a consolidation loan will save you money.
  
  
• Nonprofit credit counseling agency: Organizations such as Take Charge America offer certified credit counselors who work one-on-one with clients to figure out a livable budget and formulate an action plan for getting out of debt. In many cases, this includes a debt management plan. The benefits include lower interest rates, the convenience of making one monthly payment, an end to collection efforts, and a path to bring accounts current.
  
  
• Budgeting apps and websites: It’s easy to overlook small purchases here and there, but they have a way of sneaking up on you. Thankfully, there are numerous free resources that can help you take an honest look at your monthly budget and track your spending. Check out Mint.com, PocketGuard, Honeydue (for budgeting with a partner), EveryDollar, and You Need a Budget (YNAB).
  
  
• One-on-one coaching: there are financial psychologists who offer therapy or coaching for a fee.