How to best manage your debt

This is a paid post on behalf of Discover Personal Loans written by Pennies and Dollars.

The average American household credit card debt is now $16,883, with overall U.S. household debt increasing by 11% in the past decade. More people may be finding it more difficult to meet their monthly bills due to rising medical, housing and other costs, and find themselves in debt now more than in previous decades.

Debt doesn't usually come as one neat, tidy bill and can often grow, especially when there are multiple bills to juggle, some even unbeknownst to us. Americans certainly aren't alone and can better manage their debt using several strategies.

Common Strategies for Paying Down Debt

Business Insider notes that people naturally tend to use the "snowball method," to pay off debts, where you target your debt in order of size, starting with the smallest debt, and paying that off. As you knock out various debt payments, you are able to make increasingly larger payments on your leftover debt. For example, first you pay off the bill for small expenses like groceries and eating out, then you pay off the bill for that big trip abroad you took last year, and finally you pay your biggest credit card expenses, like car repairs or new furniture.

Another debt management strategy is called the "debt avalanche method" where you first make the minimum payments to all your debts, then allocate any remaining money to pay off the debt with the highest interest rates. Once the highest interest rate debt is completely paid off, the remaining money goes toward the next highest interest rate debt and the process continues until all debts are paid off.

Cons of using Snowball and Avalanche Debt Management Strategies

If you find yourself in debt, these strategies may work, but I think they aren't necessarily the best ways to pay down debt, and can be very costly. These strategies also don't alleviate having to juggle multiple loans at once. You'd still receive multiple bills each month, and may struggle to track and pay each bill on time every month.

These payments can vary from month to month depending on how much you're paying on the debt, which could add more uncertainty to your budget and finances. Furthermore, when you are paying down high interest debt, a large part of each payment can be swallowed up by interest incurred from not paying off the full debt at the first billing period. Interest adds more toward the balance you already owe, meaning if you cannot pay off your balance in one payment, the amount of time it takes to pay off the debt is extended.

While paying off debt should help your financial standing and reduce financial stress regardless of how you do it, these payment options still do not allow you to escape high interest rates and multiple bill responsibilities.

A Less Costly and More Flexible Alternative to Pay Down Debt

Personal loans are fixed loans that require no collateral to secure, with a set monthly payment and clear, target payoff date. One of the main uses for personal loans is debt consolidation as outlined by Consolidated Credit, with other uses including unexpected expenses such as medical bills, vet bills or home repairs.

By using a personal loan to pay off your higher-interest debt, you could save money with a lower interest rate, depending on your lender and the rate for which you're approved. With a lower interest rate and a repayment term, you might even pay off your debt faster versus higher-interest financial options.

Personal loans can provide flexibility by allowing you to choose the repayment term and loan amount and can help you to pay off your debts in a way that works for you. Some lenders, like Discover Personal Loans, offer a number of repayment terms to choose from so you can select what works for your budget. Personal loans also allow you to simplify your debts with one fixed payment per month, a fixed interest rate and definite end date for repayment.

For those who want to minimize their debt, a personal loan for debt consolidation can combine several of your debts into one monthly, fixed payment, instead of your current two or more payments. Some lenders, even provide the option to pay your creditors directly.

With so many options out there, Discover Personal Loans is a trusted lender that offers many benefits. They offer loans from $2,500-$35,000 and flexible repayment lengths from 36 to 84 months, allowing you to choose what works for your budget and financial situation. If approved, you could receive the money in a week or less.

You know what else I like about Discover Personal Loans? They offer 100% U.S.-based customer service to assist you in getting a loan that fits your needs and answer any questions along the way. Discover Personal Loans also come with no origination fees, no pre-payment penalties and, really, no fees, as long as you pay on time.

Additional Uses of a Personal Loan

Personal loans are a smart financial tool to consider when you need fairly quick access to money when life throws surprises your way, such as an unexpected car or house repair or urgent surgery.

Some people use personal loans to fund life events, like an adoption or wedding, when savings just isn't enough to cover the costs. Personal loans can even be used to cover out-of-state moving expenses, vet bills and even braces.

To learn more about Discover Personal Loans, visit

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