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There are times when just meeting your financial needs will leave you with a tremendous amount of debt. When it comes to repaying debt and properly managing your finances, you have plenty of options available to you. The best way to repay debt involves focusing almost exclusively on higher-rate debt and gradually working your way to lower-rate debts. Keep in mind that all debt need to be paid, but keeping the lower-rate debt to the minimum amount and channeling remaining funds to the higher-rate debts will help you get out of debt quicker.

Start by listing all of your debts, including creditor name, amounts, interest rate, and the minimum amount due. It works best when you list them in descending order, starting with the higher rate debt first, and ending with the lowest-rate debt. This way, you know at a glance just how much you need to pay to each creditor and which should be your primary, secondary, etc., focus.

Now that you have completed a comprehensive list of your debt, add up the “minimum due every month” column. This tells you how much you owe collectively to your debt. Balance this amount to what you have available in terms of income. You should hopefully have more money available. These extra funds should be aimed entirely at the highest-rate debt (your top priority). Do not allocate any remaining capital to all debt; use all of the remaining capital to repay the top priority creditor. This will allow you to repay debt a lot quicker.

Another good way of paying regularly and managing the personal finance is to keep depositing money in your savings account, no matter how minimal this amount might be. Even a $10 per pay period can add up and be used to pay down your debt once the savings amount accumulates. The importance of a savings account should not be overlooked as it can help weather future financial setbacks and can allow you to absorb unscheduled expenses.

As a last resort, consider borrowing money from family and friends to repay your higher interest debt. Since money from such sources is normally interest-free, you can repay such loans without having to worry about how much you are “giving away” to creditors who charge (much) higher rates.

For people with higher debt, the debt repayment plan will progress at a much slower pace. This is especially important to realize when it comes to staying on track with your plan, as you will likely get discouraged after making months worth of payments and seeing very little damage being done to your overall debt load. Keep in mind that once you start repaying debt, you will notice an almost-immediate improvement to your personal financial situation. And, within months, your credit score will echo your success.

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