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Financial Guest: A 4-Step Plan to Pay Down Your Debt

The Fiscal Femme discusses her four-step process to tackle debt.

Published March 09, 2022

8 min read

If one of your 2022 goals is to make a solid and manageable plan to pay down your debt, I have you covered. I’ll walk you through my four-step process to create a clear recipe for paying down your debt and having some fun while doing it!

1.   Take inventory of your debt.

Before you can make a plan to pay down debt, you’ll need to take inventory. This means knowing what debt you have and some key details about it.

Although this may sound simple, many of us are afraid to look or feel totally overwhelmed at the prospect of gathering this information. Facing our debt and the specific details around it can feel like an incredibly intimidating task, but most often, we’ll be less stressed when we know exactly where we stand.

Once we are fully aware of our situation, we can do something about it. There’s power in that.

To take inventory, list out each piece of debt you have in a spreadsheet or on a piece of paper. Then gather the following information about each debt:

  • The balance (or how much you owe)
  • The interest rate
  • Monthly payments or minimum payments (for credit cards)
  • Payment dates

It’s important to understand that our interest rates are not set in stone. With rates where they are (low!), refinancing our debt can be a great way to get our interest rate down, which can lower our monthly payment and reduce the amount of interest we pay (monthly and over the course of the loan). This can also make it easier to pay down our debt. Win-win! If student loan debt is your priority, you can check your potential student loan savings with Laurel Road in just 5 minutes–head here to check your refi rate.

2.   Prioritize your debt.

You’re ready to decide which debt you will pay down first. I use three strategies to help me prioritize. You can stick with one method or use a combo. Be sure to keep your motivation in mind. Which method(s) will be most motivating for you?

The interest rate method.

Prioritize paying down debt with the highest interest rates first. The highest interest rate debt costs you the most money. Once you have taken inventory, it’s really easy to go through and prioritize your debt by interest rate. Start with the highest interest rate on the list and work your way down.

The snowball method.

Prioritize paying down the debt with the smallest balances first. This method plays to our motivation. Paying off a piece of debt with a low balance takes less time and can feel a lot less overwhelming than paying off a larger balance. You get a quicker win and can cross a piece of debt off of your list. It also frees up a monthly payment to go towards debt priority #2.

The emotional method.

I added this method to the list after speaking with so many people who had a piece of debt that caused them emotional stress. This could be money you owe a family member where you don’t pay interest but it really bothers you or a loan or credit card with a certain bank where you’ve had a terrible experience. Sometimes, it’s most beneficial to prioritize the debt that’s causing the most emotional stress regardless of interest rate or size.

3.   Write your pay down “recipe.”

You now have everything you need to come up with your “recipe” to pay down debt. Here’s what you’re going to do:

  • Pay the minimums and monthly payments on each piece of debt, if possible.
  • Put any additional payments towards debt priority #1.
  • Once you’ve paid off debt priority #1, all additional debt payments can go towards debt priority #2 (including the monthly payment for debt priority #1!).
  • Continue down the list until your debt is paid off.

It may feel hard to prioritize one debt at a time, but I’ve found that it ends up being a lot more motivating because we see more significant progress when we’re putting all our extra cash towards one piece of debt vs spreading it out across all or multiple debts.

4.   Track and celebrate your progress.

Using your debt inventory (from step 1), you can track and then celebrate your progress. Make sure to take note of your starting debt balance so you can track your progress each month. Then each month as you update your current debt balances you can track how much you’ve paid down. Seeing how far we’ve come can help keep our motivation up for the long-run.

It’s also important to celebrate debt pay down milestones. How will you celebrate when you pay off a credit card or are completely debt-free? This can be anything from a happy dance on your own, a guilt-free TV binge, taking a moment to toast your progress with a friend or even having a debt-free party. You can also celebrate the smaller milestones along the way. For example, you may decide to do something smaller to celebrate every time you pay off another $500 of debt.


About Ashley Feinstein Gerstley (@thefiscalfemme)

Ashley Feinstein Gerstley is the author of Financial Adulting, a guide that breaks down everything you need to be a financially confident and conscious adult. She is also a money coach, author of The 30-Day Money Cleanse, and the Founder of the Fiscal Femme, a money platform on a mission to end inequality through financial well-being.

As a trusted money expert, she has appeared on or been quoted in The Financial Times, the TODAY Show, CNBC, Forbes, NBC, Glamour and The New York Times. Ashley has worked in the financial services industry for over fifteen years: first as an investment banker, then in corporate finance, and most recently running The Fiscal Femme. She graduated with a bachelor’s in finance from the Wharton School at the University of Pennsylvania.

This guest post is written by Ashley Feinstein Gerstley, author of Financial Adulting and Founder of the Fiscal Femme. Any opinions, findings, and conclusions expressed in this article are those of the guest writer, and do not necessarily reflect the views of KeyBank. Our guest writer, Ashley Feinstein Gerstley has promoted Laurel Road and received compensation in the past.


In providing this information, neither Laurel Road or KeyBank nor its affiliates are acting as your agent or is offering any tax, financial, accounting, or legal advice.

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