Total household debt rose to its highest-ever level in 2023 at over $17 trillion, while the debt of the average household was over $100,000.
Borrowing money can be an attractive solution to financial difficulties, but you could feel the effects for years (or decades) to come. When you have significant debt repayments eating into your income each month, there may not be enough left behind for what’s important to you, such as saving for a house or starting a family.
Deciding you want to be debt-free is one thing, but how do you get there? Debt can be complicated to manage on your own—and it’s hard to know where to start when you feel like you’re drowning in it.
Thankfully, there is a variety of useful strategies and tools to help you keep track of your debts and pay them off faster. The best options are discussed below, as well as some handy tips to give you a clear roadmap to financial freedom!
What Are the Most Common Types of Debt?
You may have multiple debts. Some of the most common types are described below.
Mortgages
Mortgages account for by far the largest amount of debt in the US at over $12 trillion. They are a type of secured loan as your house serves as collateral—if you fail to keep up with your repayments, your home could be repossessed.
This is likely the longest-term debt you have as mortgage terms can last decades. However, it also tends to have lower interest rates than many other types of debt, and the interest could even be tax-deductible.
Paying off your mortgage early may not be your priority. If you still have consumer debts (such as those described below), you’d be better off paying those off first. But if you’re ready to own your home outright, you can work out what it will take with our handy downloadable spreadsheet.
Credit Card Debt
Credit card debt totals over $1 trillion in the US. It is a type of revolving debt as you can keep borrowing indefinitely as long as you don’t exceed your limit and keep making at least the minimum payments.
Though usually an unsecured loan, credit cards can also be secured with a deposit. Some credit cards offer rewards for spending. On the negative side, however, credit cards can have high interest rates, meaning you can quickly spiral into serious debt if you’re not careful with your spending.
If you’re struggling with credit card debt, we have a variety of free resources to help you. You can also purchase our Credit Card Payoff Calculator for Excel or Google Sheets for a clear roadmap to freedom from credit card debt.
Student Loans
Student loans can be borrowed from the government, banks, or private lenders to pay for educational costs such as tuition, accommodation, and course materials. It’s an unavoidable debt for many who choose to go into higher education.
How you pay back a student loan will depend on your repayment plan. You may be expected to pay it back over a specific term, or repayment could be related to your income. Student debt can even be forgiven in certain circumstances. However, student loans differ from other debts in that they can’t usually be discharged in bankruptcy.
If you want to get out of student debt, you can download our Student Loan Snowball Spreadsheet to work out how you can pay off debts quickly.
Best Strategies to Track and Pay Off Debts
If you want to be debt-free, you need a plan of how to get there. Our tried and tested approach is to track all debts in a spreadsheet and then pay them off strategically using one of the methods below.
Debt Snowball Method
The debt snowball method involves ordering your debts from smallest to largest. You make minimum payments on all your debts, putting any extra money toward the smallest debt. Once it’s paid off, you focus your extra payments on the second smallest debt instead.
As you pay off each debt, you have more money to put toward repayments, so they gather momentum, resulting in a “snowball effect”. Paying off your debts strategically in this way means paying them off faster.
You just need somewhere to keep track of your repayments and provide a clear roadmap and timeline to freedom from debt. This is why a debt snowball spreadsheet is incredibly useful.
You can download ours for Excel or Google Sheets to track up to 32 debts and see visual projections of when you’ll be debt-free.
Debt Avalanche Method
The debt avalanche method works similarly to the debt snowball. The difference is in how you order your debts. Instead of starting with the smallest debt, you start with the one with the most interest and finish with the one that incurs the least amount of interest.
The aim of this method is to reduce the total amount you pay by paying off the debts that are doing you the most harm first.
Like the snowball method, it’s crucial to track your debt each month. Luckily we have a spreadsheet for the debt avalanche too. Just enter your figures and the spreadsheet will map out your journey to debt freedom.
How To Make a Debt Tracker in Excel
Another option is to build your own monthly debt tracker spreadsheet. This can be done with Microsoft Excel or Google Sheets, depending on your preference.
You’ll need to list out all your debts, balances, interest rates, minimum payments, and extra payments. You can update your columns manually every month, or use formulae so that some of them will automatically update to reflect changes you make.
Making your own monthly debt tracker can be a great way to save money if you have some strong spreadsheet skills. If you don’t, you can save yourself a lot of time and hassle by downloading a template.
Our ready-made solution requires a small investment but makes it easy to map out your debt repayment journey and provides charts and graphs to help you visualize your goal and progress.
Download a Printable Monthly PDF Debt Tracker
An alternative is to download a PDF version of a monthly debt tracker that you can print at home. The upside is that you can stick it on your fridge or somewhere else where you won’t forget about it.
The downside is that you have to fill everything out manually so you’re more likely to make errors. You also won’t have some of the advanced features that a spreadsheet could provide, such as auto-updating charts and projections.
If you’re looking for a printable PDF monthly debt tracker, here are a few options:
What Are the Best Apps for Paying Off Debts?
If spreadsheets aren’t your jam, perhaps you’d prefer to track your debts from your mobile. This means you can keep up to date with your progress wherever you are.
Free Monthly Debt Tracker Apps
If you’re looking for a way to track debts that won’t cost you anything, here are the best free options we could find.
Debt Payoff Planner & Tracker
This app will let you compare different payoff strategies and it comes with cool visualizations to help you track your progress and see future projections. There are also articles available in the app with advice on getting out of debt.
It’s worth mentioning, though, that you’ll have to do the process manually as the app can’t connect to your financial accounts. This app is free if you don’t mind ads, but you’ll need to pay for a subscription if you want no ads, browser access, or more features.
Debt Book
This simple app lets you build a database of your debts. You can easily keep track of who you owe what to and your total debt. However, the lack of other features means that it’s not ideal for implementing and tracking a repayment strategy.
Paid Monthly Debt Tracker Apps
If you don’t mind spending a bit of money on keeping track of your debt, then these options could be right for you.
Qapital
Qapital is an all-around financial planning app with tools for saving, investing, and budgeting. The Debt Wrangler feature can link to your student loan data. Its charts and graphs will help you visualize your debts, find ways to save, and decide which loans to pay off first.
You can try Qapital with a 30-day free trial, but after that, you’ll need to $3 a month for the basic plan, $6 a month for the Complete plan, or $12 a month for the Premier plan.
Debt Manager
With the Debt Manager app, you’ll just need to enter the details of all your debts. The app is designed to help you pay them off using the debt snowball method. It will provide you with progress bars to show you how you’re doing and calculators to help with the math. The cost of the app is $0.99.
Tips for Achieving Financial Freedom
Keeping track of your debts is the first step to paying them off. But you may be able to pay them off even faster by taking extra steps. Here are our top tips and hints for reaching financial freedom.
Save Up an Emergency Fund
You may be tempted to put every spare cent you have into paying down your debts to pay them off sooner. However, if you don’t yet have an emergency fund, it’s wise to build one before you start aggressively tackling your debts.
If you don’t save an emergency fund and you suddenly need medical care, repairs, or money for an unexpected bill, you could end up having to borrow the money and going deeper into debt.
Your emergency fund should be at least $1,000 to $2,000. Ideally, you want it to be enough to cover three to six months of living expenses.
Negotiate Interest Rates
You can always try and lower the interest rates on your debts. The lender may say no, but it doesn’t hurt to ask. A reduction in interest rates could make a huge difference to how much you owe, and the money you save could help you pay off your debts sooner.
You can call up your credit card company, and as long as you talk to the right person, they may be able to lower your interest. Ask to speak to a supervisor if they say they’re unable to change your rates.
Ultimately, credit card companies want to keep you as a customer and profit from your spending. So if they realize they might lose you to a competitor with lower interest rates, they could be persuaded to negotiate to keep you happy.
Make a Budget (And Stick to It!)
If not keeping a close enough eye on your spending is what got you into debt in the first place, then it’s time to make a budget. By keeping track of all your income and expenses, you can get a clear picture of where your money is going and which areas you can save in.
Remember to include your debt repayments in your budget so that you always leave yourself enough money to make them.
You can use apps to help you budget or download a budget template to fill out yourself. Our Monthly Budget Template can be downloaded for Excel or Google Sheets and provides charts to help you visualize your spending.
Sell What You Don’t Need
Most of us have all kinds of things lying around our homes that we don’t actually need. Things we inherited or were gifted but don’t really want, things we bought on a whim and only used once.
Everything has a price. Even if you don’t think you have anything valuable, if you sold off all the things you own that you haven’t used in the past year, you might suddenly find yourself with a nice chunk of cash.
Making an extra payment could see you reach debt freedom that bit sooner. Just don’t go and blow your cash on more things you don’t need!
Reduce Your Expenses
Naturally, the less you spend, the more money you have available to pay off your debts. Creating a budget should have shown you where you’re spending more money than you need to. Now it’s time to make changes to your spending habits.
This could mean canceling subscriptions you don’t need, or eating out once a month instead of once a week. If you’re spending a large amount on bills, shop around and look for cheaper providers.
Boost Your Income
More income also means more money for debt repayments. You could always try asking your boss for a raise or applying for jobs that pay more. Another option is to take on extra work on the side. You can check out our best side hustle ideas for inspiration.
Even if you don’t have time to take on another job, there could be a side hustle you could try that won’t take up much of your time, such as renting out your spare room, car, or equipment.
Celebrate Victories
Tracking your debt might not be much fun, but celebrating small wins can motivate you to keep the momentum going. This doesn’t mean you should blow all your money to celebrate.
Think of things that make you happy that are free or cheap and take some time out to reward yourself when you hit milestones.
The best way to map out your milestones and track your progress is with a monthly debt tracker. Download our debt snowball spreadsheet to start your journey toward debt freedom today.
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