At Town & Country, we understand that owing money to family and friends, businesses, the government, or for medical or legal expenses, can be stressful and feel overwhelming. Plus, unresolved debt can impact your credit score and make it harder to access credit later. Getting a pay-off plan in motion will help you feel in control of your debt and hopeful for your financial future. Keep in mind, the debt did not appear overnight and paying it off won’t happen overnight either. Take a breath and make a plan.

Know Where You Stand

Knowing what you owe is the first step forward. Open those bills and statements and make a list of all your outstanding debts and the people and organizations you owe money to including credit cards, auto loans, personal loans, student loans, treatment, legal bills, etc. List out who you owe, how much you owe, interest rates, if applicable, and how much you are currently paying, if anything. Once you know where you stand, you can create a debt repayment plan.

Stop Accumulating Debt

Reduce your temptation to create more debt by taking a break from your credit cards or taking out any new loans. Even if money is tight, try to avoid payday lenders who often charge extremely high interest rates making it very difficult to get out of the debt cycle.

Assess Current Financial Situation

Create a simple budget. Look at all your income sources – paycheck, money from side jobs, etc. List your current expenses – rent/mortgage, food, transportation, cell phone, etc. See where you can reduce spending to free up money to put towards debts. Streaming services, take-out, secondary vehicles may all be places you can find savings. You may need to consider getting a second job or selling assets to have more money to put towards debts.

Paying Down Debt

There are a couple of debt repayment methods to consider. Choose the one that works for you.

Roll Up – Dedicate a specific amount of money to paying debt. The amount does not change as debt is repaid. Instead, the same amount is reallocated among remaining debts.

  • Snowball – Pay off the smallest debts first and gradually take on larger debt amounts. This can be motivating to pay off entire debts sooner.
  • Avalanche – Focus on paying high-interest debts before lower interest debts. This method will likely save more money in interest charges over time.

Depending on your situation, you may be able to consolidate high interest debts into one loan with a lower interest rate and better term. Contact your financial institution to see if this is an option for you.

Reaching Out to Creditors

Once you know how much money you have to put towards your debts, prioritize the people and organizations you owe and determine what you can pay each month. If you are behind on any debts, be proactive and reach out for help. Most creditors, including collections agencies, are open to creating workable payment arrangements.

At Town & Country Federal Credit Union we believe everyone deserves a second chance. If you would like to talk with someone about creating a debt repayment plan or have other financial questions, contact us at, or call 800.649.3495.

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