Make a plan that gets you “out from under.” The short-term pain is worth it.

The faster you pay your debts:


The less interest you’ll pay.


The quicker you’ll be debt-free.


The more hard-earned money you’ll have to spend or save as you see fit.

So make a plan:


Check the rates you’re paying. There could be a better deal out there.


Make a budget and determine how much MORE you’ll use each month to pay down your debts. Use our Figure Out a Budget in 3 Minutes to make a basic budget. It’s all most people need.


Determine which debt you’ll pay down first and which you’ll pay down next.


Then pay down your debts! And keep your statements & track your progress - to stay motivated & get where you want to go.

How long till you pay off a debt

If you switch to the new payment:

Months To Pay Off with Current Payment
Months to Pay Off with New Payment
Payment-Free Months
Less Interest You’d Pay

Check the interest rates you pay. On your mortgage, auto, student loans & credit cards.

Compare what you pay to rates advertised on-line, in newspapers and magazines. Ask friends and family what they pay.

If you think you are paying too much, get your credit score - your credit score matters. Then find out the interest rates charged for people with scores in your range.

If you can improve your credit score, do that right away!

If you are paying too much, call your lender and see if you can get a lower rate. Ask to speak with a supervisor if you can’t get anywhere with the first person you speak with.

If you can’t negotiate a lower rate, consider switching lenders.

If you have a hardship, ask your lender or a legitimate credit counselor about


Forbearance. A plan that freezes your account and sets up automatic monthly payments.


Debt Management. Where you work with a credit counselor.


Watch out for debt-collection scams that prey on people in financial trouble.


If you are paying high rates on auto, student, or credit card loans, consider consolidating your debt in a lower-interest home equity loan or by refinancing your mortgage. Your new interest rate should be lower and tax-deductible. But know if you can’t make the payments, you could ruin your credit AND lose your house.

Are you paying too much? What Americans paid in interest last year:

Type of Loan Average Yearly Interest Rate
Mortgage 4.5%
New Car 4.25%
Credit Card 14.5%

The game plan. General rules & strategies.

General Rules


Pay off debts handled by a collection agency - your credit is at risk.


Don’t fall behind on any debts - pay at least the “minimum due” to ward off collection agencies.


Try not to add more debt - even more low-interest debt.

Two basic strategies.

Pick the one that makes most sense to you:


Pay off your smallest debt, then the next smallest, then the next. You’ll soon have fewer bills and creditors, and see “light at the end of the tunnel.”


Pay off the debt with the highest interest rate, then the next highest, then the next - and don’t reduce the amount you use to pay down debts until you’re “out from under.” It’s the quickest & cheapest way to pay off what you owe.

DISCLAIMER: The information provided on the NARPP website is for educational purposes only. It is NOT intended to provide personal financial advice.