We get it, debt is tough.  We recommend being aggressive and process oriented with the below steps.

Step 1: Is it accretive or erosive? Is it something that is helping you grow your net worth or is it hurting your net worth? Student loan debt and mortgages are accretive while credit cards and car loans are erosive.

Step 2: Categorize your accretive and erosive debt. List what type of debt it is, how much, the interest you’re paying, and the date it is due

Step 3: For now, just make minimum payments on all accretive debt. The reason being is usually the interest rate is fairly low, you can earn more investing over the long term, and it was debt you took on knowing that it was to help you become wealthier over time.  

• Rank your worst erosive debt by interest rate (higher interest is first priority) first then by due date (if it’s due sooner that gets ranked higher). Credit cards typically have the highest interest rates and soonest due date.
• Shift how you spend money and prioritize paying off those debts from worst to less worse as quickly as possible. If it’s a large amount, look to sell other assets and or re-evaluate how you’re spending your money and think about every dollar and how it’s spent with a little more scrutiny. Those that put their long term well-being first will shift away from things like buying new video games and clothes and use what they have instead. 

Paying off debt isn’t fun especially when it’s at the expense of not going out and doing more exciting things. But when you have high interest debt that isn’t working for you it will take an extremely long time and will be very expensive if you just make minimum payments. 

• For example, $10,000 of credit card debt will take 67 months to pay off if you’re only paying $250 a month at a time. You’ll also pay $6,616 in interest over that time period. However, let’s say you get a roommate, stop going out for a couple months, turn off your subscription services, sell off some old stuff and you’re able to make $500 payments instead of $250. You’ll pay off your debt in 25 months and pay $2,266 in interest. If you increase to $750 you’ve just cut it down to 16 months and $1,404 in interest. 

Some other strategies involve getting more income: A side job (simply helping your neighbor with a project), working out at home instead of the gym, biking to work instead of driving, cooking instead of ordering out, having friends over instead of going out, tutoring, freelance work, joining a website that gives you work like upwork.com if you have a particular skill set, or hiking instead of going to an event.