The road to debt can be rough, when faced with high amounts of debt it can be difficult to know which debt to pay first. Experts have two methods that are commonly used to pay debt.

Tallying up the debt can be a jaw-dropping experience for most consumers. The debt should be tallied to determine the most expensive debt. To find the most expensive debt, multiply the balance of the debt by the interest rate. This will allow the consumer to see how much the debt is costing on a monthly basis.

When creating the debt repayment plan, it is important to pay the most expensive debt first. This will save the consumer money on interest rates and allow a sense of gratification that can come from seeing a zero balance on your credit statement.

As a rule, any accounts facing collections should take priority. When accounts facing collections are removed from the credit file, the credit score may see a rapid improvement. When the credit score is improved, it can help to get lower interest rates from credit card companies, mortgages and other types of loans as the consumer is considered less of a risk.

When payments have been completed to eradicate the first debt, more money is able to become allocated within the budget to other debts. The cycle will continue until the debt begins to cost less and less each month. More money each month can be allocated to the debt, to a maximum of fifteen percent of the net income.

Experts recommend that a maximum of fifteen percent of the income be allocated towards debt repayment. Any more than fifteen percent applied to debt each month could drive the consumer towards more debt, as it can take away from expenses – driving the consumer to use credit to make-up for these expenses.

Credit cards with the highest interest rates should be tackled first. Aside from the debt repayment schedule, it is important to contact the credit card company to ask for a reduced interest rate. There are many options for customers to repay existing credit card debt. The consumer needs to be aware that credit card companies have programs which can eradicate interest payments that may have accumulated through the use of regular payments. The credit card company would rather receive a partial payment, than no payment towards the account.

Using these repayment methods, the consumer should be able to get out of debt quickly and efficiently.