A 13-Minute Plan for the Millions of Americans in Debt
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Initially, I was going to frontload this article highlighting the number of Americans who carry debt — some until they’re six feet under.
But I think we all understand the burden of debt and don’t really need more statistics to rub it in.
Instead, let’s just focus on being positive, proactive and breaking free.
How to Pay Off Debt: A 13-Minute Guide to Get Started
Any amount of debt is overwhelming. And when something’s overwhelming, we tend to procrastinate — or even shut down entirely.
We’re human, after all. Sometimes, the problem can seem so big that the biggest obstacle is simply knowing where to start.
But creating a plan to pay off debt doesn’t have to be too complicated. It’s just a matter of sitting down and focusing; it takes less time than you might think.
If you’ve got 13 minutes to spare, we’ve got a list of tips for putting together a rock-solid plan for paying off your debt.
That’s less time than it takes to get caught up on your friends’ Snapchat stories.
Deep breath. Ready to learn how to pay off debt?
1. Let This Company Pay Off Your Credit Cards
When you think about how much debt you have, you might feel a little anxious.
That’s where a company like Even Financial can be helpful. It can help you find personalized lending options to refinance or consolidate your debt to potentially save thousands dollars in interest.
Even will show you all the lenders willing to help you pay off your credit card and eliminate the headache of paying bills by allowing you to make one payment each month.
You can borrow up to $100,000 (no collateral needed) and compare interest rates, which start at 4.99%. The idea is to secure a loan at a lower interest rate, potentially helping you save thousands. Repayment plans range from 24 to 84 months.
Take, for example, Katherine, who faced $12,000 in credit-card debt. Holding her back? The 15.24% interest rate. By refinancing with a 5%-interest, seven-year personal loan, she saved $12,000 in interest.
If she’d kept on the same road, she would have paid something like $14,000 in interest alone over 25 years. Yikes.
So even if you’re simply curious about what’s out there, know that checking rates on Even Financial won’t hurt your credit score — and can probably save you in interest.
Total time: Three minutes
2. Get Some Help Paying off Lingering Debts
Have you ever considered consolidating your debt? It could substantially lower payments you’re already making and help you save more money each month.
A lot of us are being crushed by credit card interest rates north of 20%. If you’re in that boat, consolidation and refinancing might be worth a look.
A good resource is online lending platform Upstart, which can help you find a loan without relying on only your conventional credit score.
Unlike traditional underwriting models that use only the common FICO scoring model, Upstart’s technology looks at factors like your education and employment history to determine your creditworthiness.
It can help you borrow up to $50,000, potentially with better terms (e.g. lower interest or lower monthly payments) than traditional lenders. If managing many different bills and credit lines is a hassle, you can also use an Upstart loan to streamline all of your loans into one.
Total time: Two minutes
3. Earn Rewards When You Repay Your Debt on Time
When you were a kid, your mom probably gave you an allowance for washing the dishes and sweeping the floor. Now all you get for doing that is a kitchen that’s clean for, like, 15 minutes.
Now that you’re a grown-up, you no longer get rewarded for just doing the things that are expected of you — like, for instance, paying bills on time.
Not until now, anyway. MoneyLion, a free app for managing your personal finances, will reward you for things like paying your bills and monitoring your credit — even just setting up an account in the app.
Much like that childhood allowance, it’s basically bribing you to be good.
You’ll earn points in the app’s rewards program, and you can redeem them for gift cards to more than 15,000 retailers, including places like Walmart, Applebee’s and Amazon.
If you want to take it a step further and work on paying down debts, for example, MoneyLion can help with a loan to consolidate your debt and potentially reduce your interest rates. And it’ll reward you for that, too!
Total time: Five minutes
4. Find Some Hidden Cash
Before you start hashing out a plan to tackle your debt, it might make you feel better to find areas in your life where you can save. Then you can funnel that money directly toward those outstanding balances.
Sure, a lot of us know how to save money on groceries, but what about everything else?
Try digging up some extra cash with Paribus — a tool that gets you money back for your online purchases. It's free to sign up, and once you do, it will scan your email for any receipts. If it discovers you’ve purchased something from one of its monitored retailers, it will track the item’s price and help you get a refund when there’s a price drop.
For more consistent savings, download TrueBill, an app that’ll negotiate your bills, cancel unwanted subscriptions and refund your bank fees. On average, Truebill customers get $12 in credits off their cable bills each month.
Total time: One minute
It’s 13 minutes later and look at you! You’ve laid out a solid plan to tackling your debt!
5. Take a Deep Breath and Look at Your Credit Score
Your credit score is important. The better your score, the better deal you’ll get on a mortgage, car loan or credit card. We’re talking big money here.
Even if you’re not buying a house anytime soon, a lousy credit score means you’ll get hit with a high security deposit whenever you rent a car or move into a new apartment.
But did you know that around 20% of consumers have an error on their credit report that is likely bringing down their score? And those poor scores can hinder every part of your financial wellness.
Banks and credit card companies aren’t the only ones that look at your credit score. I’ve had to authorize a credit check whenever I want to move into a new apartment, rent a car with my debit card and buy a new phone.
So, take a deep breath, and check your credit score on a free app like CreditWise® from Capital One®*. You’ll also get a free credit report card to show you exactly where your credit shines… and where it could use some improvement.
Total time: Two minutes
Bonus: See How Your Finances Stack up to Your Peers’
Picture this: You’re sitting across from your longtime friend at the local diner. You catch up on life, then, because you’re curious, you ask your friend about her income, her student loan debt and her savings.
How many of you just cringed?
Most of us don’t have friends — or even family members — who are willing to talk explicitly about these numbers.
Status Money is an app that allows you to anonymously compare your financial situation with your peers without asking those awkward, prying questions. Tap into this database and you’ll be able to compare your income, debt, interest rates, credit score, spending… you name it.
By seeing how others are doing, you can see what you need to work on — or where you can sit back a little and just breathe easy.
*Advertiser Disclosure: Capital One compensates us when you enroll in CreditWise using the links we provided above.
Carson Kohler (@CarsonKohler) is a staff writer at The Penny Hoarder. When it comes to finances, she’s a professional procrastinator.