In simple terms, debt is owing any money to anybody for any reason. Types of debt include credit card debt, personal loans, car loans, student loans, mortgages and HELOCs.

The debt snowball method is a debt-reduction strategy where you pay off debt in order of smallest to largest balance, gaining momentum as you knock out each debt. When the smallest debt is paid in full, you roll the minimum payment you were making on that debt into the payment for the next-smallest debt. It’s the best and fastest way to knock out all your debt!

If you’ve got multiple debts, pay off the smallest debt first (regardless of interest rate). But if you owe the IRS any money (aka tax debt), you need to take care of that before anything else—even if it isn't your smallest debt.

You may need to pause your debt snowball for a short time to deal with an unexpected (or expensive) situation—like if you’re having a baby, you’ve lost your job, you or your family is dealing with a health crisis, or you’re going through a major life-change (like a divorce). Just be sure to get that debt snowball rolling again once you’re past the emergency or crisis period.

The average person who works the debt snowball with focused intensity pays off all their consumer debt (everything but their house) in about 18–24 months. But it’s really up to you—the more work you put in, the sooner you’ll be debt-free!

Around here, we teach the 7 Baby Steps. If you’ve got any debt (other than your mortgage), your goal is to pay it all off before you start saving for your future—that includes investing and saving for retirement. Trust us, the best thing you can do for your financial future is ditch your debt so you can free up your income and start building wealth faster.

A credit score is really just a number that measures your relationship with debt (how much you’ve had, what types, if you’ve paid it off)—that’s why we call it an “I love debt” score. Taking on more debt and paying it off continuously will increase your score, while taking on more debt and not paying it off will lower your score. But a credit score only lets you do one thing: go into more debt. If you don’t borrow money (aka take on debt), you don’t need a credit score. Period.

The debt snowball method is the best way to get rid of credit card debt (or any other debt you have). But you also need to stop using credit cards (cut those suckers up!), get on a budget, cut expenses, and do whatever you can to pay off your credit cards ASAP. Also, avoid things like balance transfers, personal loans and more credit cards—those will only make your problem way worse.

Yes, you should! The truth is, student loan forgiveness is not guaranteed. And you may not believe it now, but you can pay off your student loans—even if you’re staring down a big number. The sooner you take responsibility for your debt and get serious about paying it off, the sooner you can experience the peace of being debt-free (and use that student loan payment to build lasting wealth!).

If you don’t make your debt payments, you’ll get hit with late fees and interest. After a certain period of time, your debt will usually get moved to collections. This is when debt collectors call and demand you pay up. Your credit score will also take a hit. And depending on the type of debt, you may have your wages garnished (money taken straight out of your paycheck) or be sued for what you owe.

Debt collectors have one mission and one mission only—to get your money. And they’re not above stooping to some pretty low levels to make you pay (like lying, harassing and manipulating). But you have rights, and you can defend yourself against these bullies!

All consumer debts have a statute of limitations—the maximum amount of time a creditor has to take legal action against you for defaulted (late) debt payments. Creditors can’t legally take you to court over time-barred debt (debt that has passed the statue of limitations), but they can continue to call and ask you to pay that money back because, yes, it’s still your debt. Heads up, though: If you make even one payment on time-barred debt, it becomes zombie debt, and collectors can then legally come after you for it.

Bankruptcy is a gut-wrenching experience that lays out your money problems for all to see and drags you through the legal mud. It also stays on your credit report for years and doesn’t erase all your debts in most cases. You should do everything in your power to avoid filing for bankruptcy.