Overall, Americans are carrying a substantial amount of debt. Household debt rose to $17.69 trillion in the first quarter of 2024, according to theIf you're juggling multiple types of debt, it's important to remember that all debt isn't created equally, says Avani Ramnani, a certified financial planner and managing director of Francis Financial.Here are three steps to figure out which of your debts you should prioritize paying down first and how to get started tackling it.
"For anyone who's serious about getting ahead financially, I would say take the bull by the horns and get all your debt organized so you know what you're doing," she says.After you know how much debt you owe, you can decide how to start paying it down. Ramnani recommends prioritizing the balance with the highest interest rate first, since it has the potential to grow the fastest.
Not taking care of that costly debt can prevent you from meeting your other financial goals, Matt Schulz, chief credit analyst at LendingTree, tells CNBC Make It. On the other hand, it's OK to take your time paying down debt with a lower interest rate, such as your mortgage or federal student loans, since it typically accrues at a slower pace, Ramnani says.If you want to follow Ramnani's advice and focus on your balance with the highest interest rate first, you'll follow what's known as the