Start by creating a complete list of the money you owe. Include credit cards, personal loans, vehicle loans, medical debt, student loans and any other outstanding balances.

For each debt, record:

• The name of the lender or creditor
• Your current balance
• The interest rate
• Your required minimum payment
• The monthly due date

Seeing all your debts in one place can feel intimidating, but it gives you the information you need to create an effective payoff strategy.

Two common debt-payoff strategies are the debt snowball and the debt avalanche. Both can work. The best choice is the one that keeps you motivated and fits your financial circumstances.

Minimum payments can keep an account current, but they may not reduce the balance very quickly—especially when the interest rate is high. Look for realistic ways to add more to your targeted debt each month.

• Reduce spending in one or two flexible budget categories.
• Cancel subscriptions or services you no longer use.
• Apply bonuses, gifts or other unexpected income to your debt.
• Use part of a tax refund for an additional principal payment.
• Sell unused belongings and apply the proceeds to your balance.
• Consider temporary freelance, overtime or part-time work.

You do not need a large amount of extra money to make progress. Consistently adding even a modest amount to your payment can reduce your balance and shorten your payoff timeline.

Debt consolidation combines multiple balances into a single loan. If the new loan has a lower interest rate and affordable payment, consolidation may make your debt easier to manage and reduce the amount of interest you pay.

Before consolidating, compare:

• The new interest rate and annual percentage rate
• Any origination fees or other loan costs
• The length of the repayment term
• The total amount you will repay over the life of the loan
• Whether the monthly payment fits comfortably within your budget

A lower monthly payment is not always a better deal if it extends the debt for several additional years. Review the full cost—not only the payment amount.

Contacting a creditor may feel uncomfortable, but asking about your options can be worthwhile—especially before you miss a payment.

Depending on the lender and your circumstances, options may include:

• A lower interest rate
• A temporary hardship plan
• A modified payment schedule
• A changed payment due date
• Waived or reduced fees

Explain your situation honestly, ask what assistance may be available and make sure you understand the terms before agreeing to a new payment arrangement.

Your Debt-Payoff Action Plan

• List every outstanding debt and its details.
• Select the snowball or avalanche method.
• Decide how much extra you can pay each month.
• Set up automatic minimum payments when appropriate.
• Track your declining balances and celebrate milestones.
• Review your plan whenever your income or expenses change.