Debt Stacking

Start by getting all your debt info in one place. Grab a notebook or open a spreadsheet and jot down:

• What you owe (credit cards, loans, medical bills, etc.).
• The interest rate on each debt.
• Minimum monthly payments.
• The total balance.
• It might feel overwhelming, but seeing the whole picture is the first step to tackling it.

Now, rank your debts from highest interest rate to lowest. These high-interest debts (usually credit cards) are costing you the most, so we’ll focus on those first.

Figure out how much money you can put toward debt every month.

• Start with your monthly income.
• Subtract your necessary expenses (rent, groceries, utilities, etc.).
• See what’s left to throw at your debts.

Pay the minimum on all your debts except the one with the highest interest rate. On that one, throw any extra money you have.

Example:

• Let’s say you have $600 a month for debt payments, and your minimums add up to $450.
• Use the extra $150 to knock down your highest-interest debt faster.

To keep things simple, set up autopay for the minimum payments on all your debts. Then manually pay extra on the one you’re targeting (or set up an extra autopay for that if your bank allows it).

Keep an eye on your balances every month. Watching those numbers go down can be super motivating. And when you pay off one debt, celebrate! Then, roll that payment into the next debt on your list.

Once your first debt is gone, take the money you were putting toward it and apply it to the next-highest interest rate debt. You’ll build momentum and knock out your debts even faster.