My Debt Payment’s Too High, What Can I Do?

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Q. I have $27,000 in debt (non-secured signature loans) at $1612/month in payments. I am current on all my bills, but the budget is increasingly difficult to maintain. At my current pace, I won’t be out of debt for 3 years.

What can I do?

Dear Reader,

Every debt repayment plan requires time, a strong budget and persistence, especially if you want to pay it off quickly. Most successful debt repayment strategies can take a few years to complete. It all depends on how spending decisions are made, the amount owed and the extra money available for debt repayment.

The key to paying off debts quickly is to increase the monthly payments. When you pay off the principal balance owed, you save time and money paying less accumulated interests. There are several self-managed debt repayment strategies that you can consider. For instance, you can make biweekly payments or use other rollover-style repayment strategies like the snowball method. For this method, you start making higher payments toward the balance of one loan while making minimum payments on the others. Once you pay off that first loan, you use that freed-up payment to pay down the next loan faster and so on. There are two ways you can organize your loans, by smallest to largest amounts owed, and by interest rate, usually highest to lowest. If you choose to pay your smallest loan first, you will see progress very quickly, which would be a great motivator to stay on track with your payments. But, if you choose to pay your debts starting with your loan with the highest interest rate, you may not see results as quickly, but you will see higher savings in the long term.

In addition to your on-time payments, these strategies require extra disposable income. Since you mention that your high payments are becoming difficult to maintain, it’s the perfect time to reevaluate your budget, optimize it and try to free up some funds. You can use online tools or work with an NFCC-certified credit counselor from a nonprofit credit counseling agency. It helps to review your finances with an objective professional that can help you figure out how to reduce your budget in areas that you may have overlooked. You may have to change your spending habits, cut cable, change insurance providers or brew your own coffee at home until you reach your goal. You can also get creative and increase your income. You can find a temporary side job, become a delivery driver, turn a hobby into a business, or even sell some things you don’t use. Nowadays, there are more options than before to make that bit of extra money you need.

Another option to consider is refinancing your loans. If you have high interest rates and good credit, refinancing your loans can help you reduce your interest rates and, possibly, your monthly payments. Yet, this can also mean a renewed, longer repayment period. But, if you continue to pay the pre-refinancing monthly loan payments, you will be able to pay them off faster because more of your payment will go to reduce your principal. If you are considering this option, read the fine print and make sure to negotiate any loan fees if there are any. Be ready to talk to your lender to get the best possible deal.

Whatever strategy you choose, remember that it will take you some time to be successful, especially if you cannot free up as much money as you need to use toward debt repayment. Be patient and strategic about your spending habits and your overall financial situation. And remember that if you feel you need any help to put everything into place, a nonprofit credit counselor is only a phone call away. Good luck!


Bruce McClary, Vice President of Communications

Bruce McClary is the Vice President of Communications for the National Foundation for Credit Counseling® (NFCC®). Based in Washington, D.C., he provides marketing and media relations support for the NFCC and its member agencies serving all 50 states and Puerto Rico. Bruce is considered a subject matter expert and interfaces with the national media, serving as a primary representative for the organization. He has been a featured financial expert for the nation’s top news outlets, including USA Today, MSNBC, NBC News, The New York Times, the Wall Street Journal, CNN, MarketWatch, Fox Business, and hundreds of local media outlets from coast to coast.

If you have a question about your own specific financial situation, don’t hesitate to submit your question to our experts today! If you would like a thorough review of your personal financial situation, contact one of our nonprofit credit counseling agencies today!

*Some questions have been shortened and/or altered for publication purposes while others have been published as is.