How to make good on your resolution to pay off debt in 2021

If you have high-interest consumer debt, getting control of your money in the new year might sound overwhelming.

Most Americans say the COVID-19 outbreak has caused financial stress, according to a survey released in October by the National Endowment for Financial Education, with 30% listing debt as their top stressor.

Despite the pandemic, you can still pay down your debt with the right plan. Here’s how.

CONFRONT YOUR DEBT

The first step is simple, but it can be the hardest: You have to face the problem.

Angela Moore, a Miami-based certified financial planner and founder of Modern Money Advisor, which offers virtual advising and education for consumers, says it’s common for her clients to know they’re in debt but not know how much.

She recommends compiling your debt onto one document or spreadsheet, listing all balances, minimum payments and interest rates.

Though the task is daunting, most of her clients feel relief once it’s finished.

“Debt is an emotional burden,” she says, “but a lot of times that overwhelm goes away once you have clarity.”

COMMUNICATE WITH YOUR LENDERS

After listing your debt, it’s time to get on the phone with your creditors.

Ask for a temporarily lowered interest rate, reduced monthly payment or waived late fees. Make sure to explain how the pandemic has influenced your finances.

Most creditors will be willing to work with you, says Dan Herron, a California-based CFP at Elemental Wealth Advisors.

“It doesn’t hurt to say, ‘I’m still trying to do the right thing, I’m still trying to make payments. Where can we meet in the middle?’” he says.

Any break you get, take that money and apply it to your debt.

If you need help negotiating, contact a credit counselor at a...