What is Debt?

Debt happens when you use someone else’s money to buy things, like using a credit card or taking out a loan. You have to pay back the amount you borrowed plus extra money called interest. If you don’t pay it back on time, it can cost you even more.

Why Paying Down Debt Matters

Paying down your debt means you’ll have more money for the things you care about. It also helps you feel less stressed and more in control of your future. Remember—start small and keep going. Every dollar you pay off is a step closer to being debt-free!

Most Common Debt for 20- and 30-Year-Olds

The most common types of debt for young adults are:

• Student Loans: Money borrowed to pay for college or other schools.
• Credit Card Debt: Money spent using a credit card that needs to be paid back.
• Car Loans: Money borrowed to buy a car.

These types of debt can add up fast, so it’s important to keep track and work on paying them down.

3 Easy Steps to Start Paying Down Debt

1. List All Your Debts
Write down how much you owe, who you owe it to, and the interest rate. Seeing it all in one place helps you make a plan.

2. Pay More Than the Minimum
Try to pay more than the minimum payment on your debts. Even a little bit extra each month can help you pay them off faster and save money on interest.

3. Focus on One Debt at a Time
Pick one debt to focus on first. Some people like to pay off the smallest debt first for a quick win (the snowball method). Others focus on the debt with the highest interest rate to save the most money (the avalanche method). Choose the one that works best for you!