What’s the Best Way to Pay Off Debt?

There are a couple of ways to get out of debt and back on track with your finances. Let’s walk through some straightforward steps together!

Start with Budgeting Basics

To start with, make a budget. Total up all your monthly take home pay. Next, start to subtract all of your expenses. You will want to subtract your housing, car, gas, food, entertainment, clothing, insurance just to name a few. Be thorough and honest about your spending. Once you’ve subtracted everything, hopefully you have a positive number. If not, you need to go through all your expenses and decide where you can cut back until you do have a positive number.

Doing this will allow you to free up extra money to put toward your debt, and will also keep you from going further into debt.

Non-Profit Credit Counseling

One option is to work with a non-profit credit counseling agency. They will negotiate lower payments, a lower interest rate, or both with each of your creditors. From there, you pay them a small monthly fee along with the total new monthly payments and they make your payments for you.
This can be extremely helpful if you are feeling overwhelmed, are receiving phone calls, or can’t get out from under the debt due to huge interest rates. To learn more, find a legitimate credit counseling agency.

Debt Reduction Plan

Another option is to set up your own debt reduction plan. You can do this easily using a tool I like called PowerPay. It’s a free website. You will put in all your debts, including the dollar amounts, interest rates, and minimum payments.

You will have also put in how much extra you can pay each month. This is where your budget comes in handy! Even if it’s a small amount, it will make difference. The website will then calculate how long it will take you to get out of debt, and even print you a calendar showing how much to pay on each debt, each month. (The directions for this site are on the homepage, on the right-hand side.)

Finding the Right Plan for You

The difference between the two programs is that with PowerPay, you still make the monthly payments, the interest rate stays the same, and the cards remain open. When using a Debt Management Program through a credit counseling agency, you make a payment to the agency and they pay your creditors each month. The interest rates are lowered but the cards will close.

You can also use a combination of both of these plans if there are cards you want to remain open, but others you want to close.


The burden of debt can be overwhelming. Making a plan to tackle this debt can help lower your stress and allow you to see a way out. With a little hard work, you can be debt free.