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    How To Come To Terms With Your Debt And Create A Plan To Pay It Off

    May 13, 2020 Amanda Cross 7 min read
    Note: This post may contain affiliate links. Please see my disclosure for more details. Thanks for supporting the brands that make The Happy Arkansan possible!

    Let's talk about debt. We all have some form of debt, whether it's a credit card or a student loan. Not all debt is bad, but it can stop us from living our best lives, especially if we ignore it. Today, I wanted to share some tips for coming to terms with your debt and creating a plan to pay it off. I'm going on this debt journey with you, my friends. I've had my fair share of debt problems, even though my parents warned me about the dangers of debt. College and graduate school Amanda just wouldn't listen. I am working on it now, though. You can do the same.

    1. Know That Debt Won't Go Away

    I think everyone's number one piece of advice about debt is that it won't go away. There's a reason for that. It won't. If you owe something, you owe it. Even if you don't currently know who owns the debt, it will get back to you eventually, and you'll need to pay the debt. As much as everyone would love for debt to get sucked into the ether, it's not how life works. If you let debt sneak up on you, it could rear its ugly head at the most inopportune time. On the other hand, if you take more control over your debt, the cards are in your hands. Debt collectors and credit card companies are more likely to work with someone who is taking initiative instead of hiding from what they owe.

    2. Hold Your Very Own Debt Come To Jesus Meeting

    If you're trying to pay off your debt, you first need to come to terms with the amount of debt you have. Have your very own debt come to Jesus meeting. During this meeting, you're going to sit down with your credit report, credit cards, student loans, and any other debt you have like medical bills and car loans. Once you know the extent of your debt, you'll be able to make a plan to get rid of the debt. If you don't know how much you owe, you can never come up with an accurate system to pay off your debt.

    3. Check Your Credit Report For Anything Negatively Affecting Your Score

    Not all debt reports on your credit. If you want to make the biggest impact on your credit score while paying off debt, you should start with any companies who actively report you. You can do this by checking your credit report for negative marks. You especially want to go after fixing any debtor who reports you every month, because they will consistently drag down your score.

    Paying off debt isn't enough to make these stop affecting your score. You should also consider trying to get these collections or negative accounts taken off your score as well, which isn't always easy. Going the extra mile to remove these from your credit report will do wonders for your credit score, though.

    4. Remember To Check Out The Interest Rates On All Your Debt

    One big thing you want to do is figure out the interest rates of all of your debt as you understand the various debt you have. Interest rates and how much you owe will help you determine which debt to tackle first. Gather this information as you are figuring out all of your loans and debt.

    5. Name All Your Credit Card Debt From Cards You Still Have To Cards That You No Longer Have/Use

    Next, it's time to go through all of your credit and store cards. List out every single one from cards you still have to cards that are in collections. You want to pay off all your debt, not just the ones that are affecting your score. Although, some debt will need to get paid off sooner than other debt based on how it's affecting your credit and ability to go after your financial goals.

    6. Figure Out All Your Student Loan Debt

    I am sure that many of my readers may be dealing with student loan debt. My blog started as a college blog, after all, and I have plenty of college-related content on the blog. I know I am dealing with a massive amount of student loan debt, but I don't want to pay it off for the rest of my life. I have some aggressive goals to get rid of my debt before I'm 40, y'all.

    When observing your student loan debt, here are some things you want to consider:

    • How much do you owe?
    • What are the interest rates on your loans?
    • Can you get on an income-based repayment plan?
    • Are there any options to consolidate the loans you have?

    Loans can be so finicky. Luckily, almost all of my loans were financed by the federal government. Federally issued loans mean that I have a low-interest rate on all of them. I did take a Perkin's loan, which has a bit of a different payoff system, but the federal government controls everything else.

    Research Your Best Repayment Options

    One of my favorite tools for researching the best repayment options for you is the loan simulator that the United States federal government supplies. Most of my readers are based in the United States, so if you aren't based here, maybe your country provides something similar. Once you log-in to your Federal Student Aid account, this simulator will be extremely helpful because it will be based on the loans that you have.

    7. Understand Your Other Debt

    My main debts are student loans and credit card debt, but I realize that there are several different debts that you all might owe. You should also take the time to write down all these debts as you are considering paying off what you owe. Here are some other types of debt you might owe:

    • Home loans
    • Car payments
    • Medical bills
    • Small business loans
    • Personal loans

    8. Settle Everything That You Can

    Here's the thing about debt collectors, they will often settle for just a portion of what you owe. Many debt collectors buy debt for less than you owed on the debt. They would rather recoup at least some of their money back instead of nothing. If you can, settle debt, and get it in writing that the debt is paid off. If you've been looking at letters from debt collectors, you've probably seen quite a few debtors offering certain settlements already. Don't be afraid to negotiate, get a debt paid off in installments, etc. You'd be surprised how flexible many debt collectors can be.

    9. Figure Out Which Debt You Want To Tackle First

    All debt is not alike. For example, my student loan debt is rising at around 5% interest typically. Right now, it's not growing at all thanks to the CARES Act. So, it wouldn't make a ton of sense to put too much effort into that. On the other hand, my credit cards have horrible interest rates. My goal right now is going to be to tackle credit card debt first, and then move my attention to paying off student loan debt. I can't tackle everything at once, so I need to pick which debt deserves more of my attention. You need to do the same.

    10. Put Aside A Portion Of Your Money Each Month For Debt Reduction

    After you pick which debt to tackle first, you need to put aside a portion of your income each month to work toward debt reduction. This number can be as aggressive as you can afford. If you have the money, I would suggest you put more toward debt reduction right now. You likely aren't going out to eat as much as you used to or going to see concerts, movies, etc. You can put more of that entertainment income towards debt reduction until the world opens up safely again.

    Debt reduction should come second to the income you need to live, though. Pay the payments you need to unless you can afford to pay more in a month.

    11. Don't Use Debt Reduction As A Way To Use Freed-Up Credit Cards

    As you are paying off credit cards, your cards will probably free up. Don't use this as an excuse to spend more money unless you'll do it responsibly. There's no point in paying off your debt if you're just going to build up more debt and have to pay it off again. Learn from your first mistake and use your freed-up credit cards responsibly.


    Getting rid of debt is easier said than done. We all want to live a debt-free life, but it's going to take more time than most of us want to dedicate to it. You'll likely have to sustain from somethings to pay off the debt you owe. That's a part of the process. Hopefully, you can pay off your credit cards and debt, and have a relaxing future. Don't be so hard on yourself, though. You don't need to be in a constant state of debt reduction. Sometimes you can coast and spend more on fun things, too. After all, we are all going to leave this earth eventually, and it won't matter how much debt you had when you go. Do your best, pay off what you can, but don't forget to live a life worth living too.

    What are your best debt reduction techniques?

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    About Amanda

    Hey Y’all!
    My name is Amanda Cross, and I am the blogger behind The Happy Arkansan. I am a blogger, freelance writer, and podcaster. When I am not creating content for any of my content online, I can usually be found baking, watching YouTube, or napping. I love helping millennials and young adults navigate the mess that is adult life. Keep reading for my thoughts and experiences.

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