Eliminate Your Debt FAQ

Use the debt avalanche method: pay minimums on all debts, then put extra money toward the highest interest rate debt first. This saves the most money. If motivation is an issue, try debt snowball (smallest balance first) for psychological wins, but avalanche is mathematically optimal.

Pay as much extra as possible while maintaining emergency fund and basic needs. Even $25-50 extra per month makes a huge difference. Example: $5,000 at 18% APR - minimum payment ($100) takes 94 months; adding just $50 extra reduces it to 43 months and saves $2,400 in interest.

Common approach: Build a small emergency fund ($1,000) first, then focus on high-interest debt (>6% APR). Once debt is paid, build full emergency fund (3-6 months expenses). High-interest debt creates a guaranteed 'return' from paying it off that often exceeds investment returns.

Credit card minimum payments (usually 2-3% of balance) are designed to keep you in debt forever. They barely cover interest. A $5,000 balance at 20% APR with 2% minimums takes 30+ years and costs $11,000+ in interest. Always pay more than the minimum.

Debt consolidation may help if you get a lower interest rate and don't accumulate new debt. Options include: balance transfer cards (0% intro rates), personal loans, home equity loans. Note: consolidation without changing spending habits often leads to more debt.

Track progress visually (debt thermometer, apps), celebrate milestones, find accountability partners, remember your 'why' for becoming debt-free. Consider debt snowball method for quick wins if avalanche feels overwhelming. Small victories build momentum for bigger ones.

Priority order: 1) Payday loans/cash advances (extremely high rates), 2) Credit cards (high rates), 3) Personal loans, 4) Auto loans, 5) Student loans, 6) Mortgages (lowest rates, tax benefits). Always pay minimums on everything, then attack highest rate debt with extra payments.

Yes, if you're struggling, contact creditors before missing payments. Options include: payment plans, interest rate reductions, settlement offers (if severely behind). Having a hardship (job loss, medical bills) may strengthen your negotiating position. Get agreements in writing.