Paying Down Debt

The first step toward stopping the debt cycle is creating a budget that allows you to avoid incurring any new debt. Be realistic and include all of your monthly expenses with some cushion to save for unexpected costs. Next, you need to know where you stand. Make a list of your debt (good and bad), including total balances, minimum payment amounts and interest rates. Your list might look something like this:

Debt Total Owed Minimum Monthly Payments Interest Rate
Credit Card $2,000 $50 18%
Student Loan $12,000 $115 6%
Medical Bill $800 $50 5%
Auto Loan $6,000 $150 2.9%

Strategies to Reduce Debt 

Credit Counseling

Calling on a professional to help you manage debt is a great way to get advice specific to your situation. You can work with a credit counselor—often free through a nonprofit agency or a financial institution like Navy Federal—to review your bills and budget to help evaluate the best debt-relief options for you.
Counselors can help you change your spending habits and teach you the elements of money management. Sometimes all you need is a clear picture of where your money is going to figure out that intentional spending could make your life much less stressful.

Debt vs. Savings Calculator

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