A 13-Minute Plan for the Millions of Americans in Debt

man drinking a cup of a cofree
Tina Russell/The Penny Hoarder


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. Take a Deep Breath and Look at Your Credit Score

A woman breathes before beginning yoga.
Tina Russell/The Penny Hoarder

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 your credit score could be inaccurate? One out of five credit reports have an error, according to a study by the Federal Trade Commission.

To keep a closer eye on your credit, get your credit score and a “credit report card” for free from Credit Sesame. It breaks down exactly what’s on your credit report in layman’s terms, how it affects your score and how to address it.

Because it simplifies everything, you should be able to spot any errors. For instance, if you find an “unpaid” credit card that you know you paid, or a bill in collections you know never existed, you can dispute the incorrect information and raise your credit score.

James Cooper, a motivational speaker, raised his credit score 277 points using Credit Sesame. Now he talks to high school students about the importance of having good credit and uses what he’s learned through Credit Sesame as a blueprint for his lessons.

“We want to touch the Z Generation,” Cooper says “We’re not in the business of fixing credit. We want to get to you before you have to fix your credit.”

Total time: Two minutes

2. 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

3. Earn Rewards When You Repay Your Debt on Time

Woman at her desk paying bills
GaudiLab/Getty Images

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

5. Start Saving Without Trying

Saving money is tough. So what if you could do it in a way where you wouldn't even notice?

Digit makes that possible.

This innovative app automates saving for you. Simply link it to your checking account, and its algorithms will determine small (and safe!) amounts of money to withdraw into a separate, FDIC-insured savings account.

Bonus: Penny Hoarders will get an extra $5 just for signing up! Additionally, savers will receive a 1% bonus every three months.

Using this set-it-and-forget-it strategy, one Penny Hoarder saved $4,300 without noticing — read his Digit review.

If you need that money sooner than expected, you’ll always have access to it within one business day.

Digit is free to use for the first 30 days, then it’s $2.99 per month afterward.

Total time: Two minutes

It’s 13 minutes later and look at you! You’ve laid out a solid plan to tackling your debt!

Congratulations.

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.

Carson Kohler (@CarsonKohler) is a staff writer at The Penny Hoarder. When it comes to finances, she’s a professional procrastinator.

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