Which Debt Should You Pay Off First? (2024)

Not everyone will have the time or means to attack their debt head on with the snowball, avalanche or snowflake method.

If that’s you, consider the upcoming alternative strategies for managing your debt.

Refinance Your Loan

Some loans will allow you to refinance them for a lower interest rate and monthly payment. This can be especially helpful for students with federal or private loans. Speak with your lender about your refinancing options – you could save yourself some time and money.

Consolidate Your Debt

For many borrowers, keeping track of multiple loans is a major part of the struggle. This is why some opt for debt consolidation to turn multiple debts into a single monthly payment.

Common forms of debt consolidation include the options we’ll examine next.

Home Equity Loan

A home equity loan allows you to borrow money against the equity you’ve built in your home. A major risk with this type of loan is that your home serves as collateral, meaning you could lose it through the foreclosure process if you fail to pay off your debt.

Home Equity Line Of Credit

Often abbreviated as HELOC, this is similar to a home equity loan in that you’re borrowing against your home’s equity, but you have a line of credit instead. Similar to using a credit card, you borrow from the HELOC and repay it as you go. Again, your home is collateral in this deal, and defaulting could mean you lose the house through foreclosure.

Balance Transfer Card

Much like it sounds, a balance transfer takes the balance from one or more credit cards and moves it onto a new card – in many cases, one with a 0% APR introductory period.

This introductory period typically lasts a year, and if you can pay off the debt within that time frame, you can save yourself from high interest charges. A year may be too short of a time for some debts, though, so if you have a high balance, you may want to consider other ways to get out of credit card debt.

Personal Loan

A personal loan can act as a debt consolidation loan and can be used for many different expenses. You can use the loan to pay off your other debts, and then you’ll only have the one loan to worry about. Getting a personal loan is a relatively straightforward process that starts with finding the right lender. Keep in mind that rates, terms and loan amounts vary from one lender to another.

Rocket Loans℠ offers loans from $2,000 to $45,000 for a debt consolidation personal loan, and we offer same-day financing – meaning you could receive your money the same day you’re approved.1