Protect required payments first
Missed required payments can create fees, credit damage, and additional pressure.
- List minimum payments and due dates.
- Contact creditors early when a payment may be missed.
- Use an appropriate financial counselor when required obligations cannot be covered.
Compare payoff approaches
There is more than one reasonable way to organize extra debt payments.
- Debt snowball prioritizes smaller balances first.
- Debt avalanche prioritizes higher interest rates first.
- Compare interest cost, motivation, cash flow, and the household's ability to stay consistent.
Look at total cost
Monthly payment alone can hide how expensive borrowing is.
- Review interest rate, term, fees, and total amount repaid.
- Check for prepayment penalties.
- Compare a faster payoff with the monthly budget before committing.
