I want to pay off $20,000 of credit-card debt in one year. Should I hire someone to negotiate my bill?

By Aditi Shrikant

'I used to have $60,000 and I've been able to knock it down'

"From my understanding, I enroll with a company and they negotiate with all my creditors, while I just don't pay the credit cards and let my credit take a hopefully short-term hit." (Photo subject is a model.)

Dear Dollar Signs,

I just turned 40 and my one goal for the upcoming year is to get out of debt. I used to have $60,000 and I've been able to knock it down to $20,000. It's all credit-card debt.

I'm debating whether I should consolidate the debt or negotiate down what I owe overall. The latter seems interesting and scary.

From my understanding, I enroll with a company and they negotiate with all my creditors, while I just don't pay the credit cards and let my credit take a hopefully short-term hit.

I'm a bit hesitant, though. The right thing to do feels like tightening up my budget and just paying off the highest-interest debt first and working my way down, as I've done in the past.

Please advise.

Budgeting on my Birthday

If you're just starting out on your money or career journey and have questions about how to navigate your finances, we want to hear from you. Write to Dollar Signs, MarketWatch's new advice column, at dollarsigns@marketwatch.com.

Dear Budgeting,

Happy birthday! And, perhaps more importantly, congratulations on paying off $40,000 worth of debt. I know that's not easy, which is perhaps why you're intrigued by options like debt consolidation and hiring someone to negotiate down your bills.

I don't think you need to involve a third party. Not every agency that offers to negotiate down or consolidate your debt is predatory, but it's something to be aware of, says Mark La Spisa, a certified financial planner based in Barrington, Ill. "There are a lot of bad actors," he notes.

Some of these debt-relief services charge large upfront fees, but don't deliver on the promise of actually negotiating your debt down. You could instead consult National Debt Relief, which has a better reputation.

"My initial reaction is that $20,000 is not that bad," La Spisa says. "I wouldn't be concerned about negotiating it down."

You've proven that you can pay off double the amount you owe right now, which is why I'm confident you have the discipline to pay this down as well. But I can understand that it feels daunting - especially because you're now aware of how much sacrifice it takes to pay off significant amounts of debt.

That's why you might want to switch up your approach. Yes, paying off your high-interest debt first is smart, but it's a slower process. La Spisa always suggests people take actions that can pretty quickly net them some "wins."

"I'm a bigger proponent of going after the lowest balance and getting rid of it and working your way up," he says.

Paying down one balance, no matter how small, can give you that dopamine spike and motivate you to keep going - similar to how crossing the easy stuff off your to-do list can give you the momentum to tackle the big stuff.

But there are no right or wrong ways to do it, as long as you are consistent and know that you want to get rid of this as soon as you can. If you are more anxious about the higher interest rates, tackle that first.

Tips for paying down debt

Automating your contributions for debt repayment can help keep you on track. Bernadette Joy, the founder of the financial boot camp Crush Your Money Goals, who paid off $300,000 in three years, says it might help to reframe your payment plan as a daily expense.

In an email to MarketWatch, she wrote: "$20,000 a year is about $55 a day, every day. That might feel like a lot, but it helps to change the mindset of at least attempting to find cost savings or opportunities to earn that much each day. Some days you'll hit it and others you won't, but at least you can try."

If you're working on paying off the balance of a credit card, don't use it.

"The biggest mistake I see people making is still using the card while trying to pay it down," Joy says. "You really need to stop using the cards until their balances reach zero if you want to not be discouraged when your balances go up and down."

I know it's tempting to hold on to points, but if you are truly trying to get out of debt, it might serve you better to use them.

"I promise you're not winning by saving points while your cards are charging upwards of 20% in interest," Joy says.

I'd also urge you to examine how you got into this much debt. If you continue the habits that led you into this situation, you likely end up back where you started, even if you do manage to pay it all off. It would be a shame to get your balance down in a year, only to find yourself in a similar amount of debt the next.

And don't be afraid to celebrate milestones between $20,000 and $0. Maybe every time you pay off $8,000, you can treat yourself to whatever indulgence you prefer. Paying down debt is hard! Small, intermittent rewards can motivate you to keep going.

It sounds like you know what to do, but are also aware of how stressful it will be to execute. And yes, your day-to-day might feel more strained while you're trying to knock out this last $20,000 - but I promise that you'll feel much lighter entering your 41st birthday with no debt.

Write to Dollar Signs at dollarsigns@marketwatch.com.

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-Aditi Shrikant

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06-30-26 1422ET