How to Pay Off Unsecured Credit Debt

Developing a plan can help you pay down unsecured debt faster.
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Being in debt can be a real downer, especially when it prevents you from reaching your financial goals. For married couples, debt can be a huge roadblock if you're trying to save for a home, start a family or plan for retirement. If you're carrying around a significant amount of unsecured credit debt, developing a debt repayment strategy can help you and your spouse get on the fast track to financial freedom.

Step 1

Add up all of your unsecured debts. This might include credit cards, personal loans and medical bills. Write down the total balance for each debt, along with the interest rate and the amount of the monthly payment.

Step 2

Go over your budget to see how much money you have each month to put toward debt repayment. Make a list of all your fixed expenses, including your mortgage and utilities, as well as your variable expenses, which might include things like groceries or dining out. Compare the total amount you're spending each month to your total monthly income. Ideally, you should have more coming in than going out.

Step 3

Arrange your debts in the order in which you want to pay them off. You can either list them by the interest rate from highest to lowest or the balance from smallest to largest. Mathematically, paying down the debt with the highest interest rate will save you the most money, but paying down smaller balances first can be more motivating.

Step 4

Make the minimum required payments for all of your unsecured debts except the one that's at the top of your list. For that debt, you'll want to pay as much above the minimum as you can each month until it's paid off. Once the first debt is knocked out, you can roll your payment over to the next debt. As you continue paying off your debts, keep rolling the newly available money over until it's all going to the last debt on the list.

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