After close to a year of living with the pandemic, the effect on people’s finances has varied widely. If you’re in the fortunate position of still having a steady income, you can plan for what lies ahead in 2021.

A good first step is dealing with debt. Maybe you leaned on credit cards to get through the ups and downs of 2020 or you’re wondering how to get a head start on student loan payments once the forbearance period ends. Perhaps you’re feeling the aftereffects of holiday spending — 75% of holiday shoppers said they planned to put 2020 gift purchases on a credit card, NerdWallet’s 2020 holiday shopping report found.

The strategies for paying down debt aren’t different in a pandemic, but keeping yourself motivated in stressful times may take a little more effort. Don’t beat yourself up; just get started and do your best.

Help yourself — and others — with a budget

First, understand your cash flow.

NerdWallet’s 2020 household debt study found that 14% of U.S. adults said their household financial situation had gotten better since the onset of the pandemic, and 43% said their household financial situation has stayed about the same.

If you’re doing OK, you’re probably feeling grateful when so many others are going through a hard time. Making a budget lets you plan how much you can put toward debt and savings — and what you can donate to help your community.

You might have great intentions, but putting everything down on paper will help you visualize how much you actually have left over, says Elaina Johannessen, program director of debt management operations and support at LSS Financial Counseling in Duluth, Minnesota.

“The best way, not the most fun way, is creating that good, old-fashioned budget,” she says.

The 50/30/20 budget is a simple way to think about your money:

• Use 50% of your take-home pay for essentials, which include shelter, food, utilities and paying the minimums on all your debts. Your budget should earmark money for regular bills as well as expenses you know will pop up during the year, Johannessen says, such as vet bills or insurance payments.
• Thirty percent of your after-tax income goes toward “wants,” which covers all your discretionary spending, including giving back. If you know which causes you want to support, websites like Charity Navigator and GuideStar provide information on nonprofits that best serve those causes.
• Finally, 20% of your income goes toward savings and extra debt payments. If the pandemic has taught us anything, it’s the importance of having a rainy day fund. “Even though you have the means to pay off your debt, if you don’t have savings, that needs to be a focus,” Johannessen says. A savings cushion will let you navigate bumps without adding more debt.

Johannessen encourages anyone thinking about paying down debt to also take advantage of a free budgeting session with a nonprofit credit counselor.

Know your debt numbers

Next, understand how much you owe.

From your budget, extract a list of all your debt accounts, the interest rate on each and how long it would take to pay off each balance at your current pace. You can use a debt calculator to figure out that timeline.

This exercise will help you prioritize your debts and pick a repayment strategy that works for you.

Pick a debt repayment strategy

Once you know your debt numbers and cash flow, it’s time to pick a strategy.

There are two popular methods of paying down debt: the debt snowball and the debt avalanche. In both methods, you pick one debt to focus extra payments on, while paying at least the minimums on all the others.

Using debt snowball, you knock off debts from the lowest balance to the highest. Once you’re done with the smallest debt, you roll that amount into payments on the next-highest debt amount. This strategy gives you quick wins to stay motivated.

Using debt avalanche, you pay off the debt with the highest interest rate first, which can reduce how much interest you pay overall and may get you debt-free faster.