Decide which debt to pay off first. If you racked up more than one credit card, or you took out a personal loan from the bank, list them all down – source, balance, interest rate, due date and minimum payment required. Arrange them with the highest interest rate first. For loans with the same rate, prioritize the one with the smaller balance.
Stop borrowing. You shouldn’t add your burden. It’s belt tightening time and use cash for all expenses.
Pay the minimum payment. Obviously you can’t pay all your debt in full. But make sure you pay the minimum and pay them before the due date to avoid paying penalties. You’ll still be paying interest on the unpaid balance.
Allocate all you can afford to the highest-rate loan. While paying the required minimum for your other loans, pay as much as you can for the first item on the list until it gets paid off. When that’s done, apply the same amount you’ve been paying off on the first and add the minimum you’ve been paying for the second item on the list, until you pay it off and so on.
Borrow at a lower rate. It takes a long time to pay the entire debt, consider borrowing from other sources that charge lower and use the proceeds to pay your high cost loans. You can transfer balances to a credit card that offers 0% for the transferred balance for 12 months. You can borrow from relatives at a nominal rate. If really necessary, you may consider taking out a home equity loan.
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