If you are one of the millions of Americans the find themselves in billions of dollars of debt every year, you will need to make some important decisions in creating a strategy to pay off your credit card, loan, and other debt. Owing money to other people is a stressful, frustrating experience that is often difficult to overcome without an effective plan that prioritizes the order you pay off outstanding bills.

Unless you win the lottery or inherit a fortune from a long-lost uncle, the only way you can pay off debt is by making some changes in your life and the approach to your finances. You can expect a roller coaster ride that takes patience, persistence, determination, and the self-awareness to be honest about your purchasing and saving habits.

Which Debts Should You Pay Off First?

The order you pay off your debt depends entirely on your specific circumstances. There is even some disagreement between professional credit counselors on the best strategies to become debt-free. There is universal agreement, however, that doing something is better than doing nothing, and being willing to do what it takes to pay off tackle your lingering debt.

The following are some industry guidelines and suggestions for where to start the process of paying off your debt.

When to Start With Paying Off High-Interest Debts

Most credit counselors would agree that working to pay off those debts with the highest interest rates is the best place to start. The longer those accounts are left with balances, the more interest it will add to the total amount you owe. Getting the biggest portions of the overall debt handled first takes discipline and patience while it creates a foundation of success for paying off the remaining balances.

Debt with the highest interest rates is taking the most money from your monthly income. Paying off this debt first will give you more flexibility to distribute payments to the others and save you money on long-term interest payments. It will take you longer to whittle down the balance on these accounts before you can move onto the rest of your debt, and you will need to be patient and focused as you progress.

When to Start With Paying Off Smallest Debts First

The amount of money you would use to pay off the highest interest debts can be used to eliminate some smaller debts instead. This allows you to see that you are making progress and use that as motivation to continue. Settling smaller accounts quicker will begin to free up finds to apply to other, larger debts. Keep in mind that the longer you get to those high-interest accounts, the more debt it will tack onto the total amount you owe.

Which Credit Cards to Pay Off First

If you have allowed credit card debt to accumulate, there is one thing you need to do even before deciding which of them to pay off first – stop using them. Cut them up, put them away, remove them from your computer’s memory, or your efforts to reduce your debt will be for nothing. From there, you can begin to reduce your credit card debt using one of several different strategies, including:

Balance transfer

If you already have a high credit score, you can use a balance transfer credit card with a 0% introductory rate for a specified amount of time. You can use this time to pay down debt without added interest. You will have to pay a balance transfer fee typically ranging from 3%-5%, but you still see significant savings while you pay off other high-interest credit cards.

Debt consolidation loan

If you are eligible, a debt consolidation loan will carry lower interest rates than your high-interest credit cards. While it may seem like a consolidation loan is adding new debt to existing debt, when handled responsibly, these loans can help reduce interest rate payments as you work to pay off your debt.

Debt avalanche

A streamlined approach to debt reduction, debt avalanche is the process of paying off debt with the highest interest rate first, then moving on to the next-highest, and so on. It is a strategy designed to pay the least amount of interest throughout the entire process.

Debt snowball

Flipping the debt avalanche approach on its side, a debt snowball approach pays off those accounts with the lowest balances first, regardless of the interest rate. While you will wind up paying more interest, the concept is to get quick, small wins and build momentum and motivation to handle larger debt.

Debt blizzard

A debt blizzard throws a twist to the strategic options to pay off credit card debt. You start by paying off the credit card with the lowest balance to start the process and get an easy win. From there, you switch the avalanche method and pay off the card with the highest interest rate. Implementing a blizzard strategy mixes things up to give you a quick win and the chance to pay less in interest charges.

What You Pay Off First Sets the Tone to Become Debt-Free

The first debtor you pay off will set the tone and structure of your plan. Consulting with a professional credit advisor will help you determine where to start and the most effective and logical steps you can take to eliminate your debt. The goal is to pay off what you owe and the least amount of added interest and fees. The first credit card or loan you pay off will send you on your way towards financial stability and security.

If you can create a reasonable plan and have the discipline and focus on sticking with it, your debt will go away regardless of what you pay off first or which strategy you use. The important thing is the first step of taking an honest look at your financial situation and the options you have based on how much you owe and your ability to pay it off.