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Have debt? You’re not alone—the average household credit card debt is nearly $7,000.1 But you can reduce yours by coming up with (and sticking to) a repayment plan. Here’s how to pay off debt fast.

1. Separate your debt into two lists

The first step to paying off debt is to acknowledge it. Make two lists of your total debt: debts under $1,000 and debts over $1,000. From there, sort your debts under $1,000 from largest to smallest balance. Then take your debts over $1,000 and order them from largest to smallest interest rate. By doing this, you can begin getting rid of your smaller debts as quickly as possible.

2. Pay off debt balances from smallest to largest

Start to pay off your debt balances in order from smallest to largest balance, gaining momentum as each balance is paid off. Make minimum payments on all debts except the smallest. Pay as much as you can on that until your balance is zero, repeating from smallest-to-largest until each debt is paid off. It's like a snowball effect: You'll gain momentum from paying off those small debts to help get to the larger debts.

Paying off your debts under $1,000 can help make it easier to pay off your debts over $1,000 later.

3. Simplify and automate your debt

Sticking to your repayment plan becomes easier if you don’t have to think about it. Divide the amount you owe by the number of months you think it will take to pay it off. Then set up automatic payments for your different debts. Setting up a system will give you the confidence to move toward a better financial situation.

Sorting through all of the tips out there can be tough, so remember: Your debt repayment plan really depends on your personal situation, and what is going to boost your confidence in the end.

3 Key Takeaways
  1. Start your repayment plan by making two lists of your total debt, one with debts smaller than $1,000 and one with debts larger than $1,000.
  2. Use the snowball method to begin making large payments on your smallest debt balances first, while making minimum payments on others.
  3. Consider simplifying your repayment plan by setting up automatic payments to your debt accounts.

Challenge yourself

Keep reading to learn more ways to leave your debt in the dust.

1 “2018 American Household Credit Card Debt Study,” Dec. 10, 2018, NerdWallet

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