6 Ways to Manage Your Debt No Matter How Much You Owe

Debt is involved in some of the biggest decisions and achievements in our lives. Taking out a mortgage, buying a new car, and using loans to pay for college are common ways people accumulate debt, but they don’t necessarily mean you’re mismanaging your money.

The average American household owes more than $137,000 in debt. If you’re in a similar situation, remember that it’s how you manage that debt that counts. Even with high amounts of debt, smart decisions and the right debt management strategies can minimize the impact of that debt and reduce how much you owe.

Here are six debt management strategies to help you get on track to becoming debt-free

1. Prioritize on-time payments

Improve your debt outlook by making sure you aren’t creating any unnecessary debt for yourself. Missed or late payments on debts can result in late fees and even interest rate hikes, costing you a lot of money for no good reason.

If you make on-time payments, you can remain in good standing with your debtors while protecting your credit score and making small payments toward your debt. 

2. Pay down high-interest loans first

Also known as the “Avalanche Method,” this strategy prioritizes extra debt payments to the highest interest-bearing accounts

Credit cards, for example, are notorious for their high APRs, which makes them popular targets for anyone trying to minimize their total amount of interest paid.

Conquer credit card debt with the tips and strategies outlined in this guide.  Download your copy here. >>

3. As loans are repaid, reallocate that money to other debts

Once you’ve repaid a loan, don’t use the extra money from that missing minimum payment to fund vacations or other entertainment. Make your money work for you by taking the leftover money and piling it on to other debt payments you’re making.

If minimum payments are making money tight, you can also try using the “Snowball Method,” which involves paying off the smallest loans first to free yourself from minimum payments sooner. 

Check out our Debt Payoff Calculator to explore different scenarios for paying off balances ahead of schedule.

4. Use consolidation to lower your payments and/or save on interest

Struggling to keep up with payments and/or generating so much interest that you’re having trouble paying down the principal? Consolidation might be a worthwhile option. 

Consolidation moves all of your debts into a single loan with a single interest rate and monthly payment. In some cases, you can reduce your total monthly debt payments and/or save on interest. It also simplifies your debt obligations, making it easier to track payments and your progress in paying down debt.

5. Consider balance transfers for short-term relief

If you need a small amount of relief—especially from revolving credit card balances—and don’t want to take out a personal loan, a balance transfer might be a good option. Many credit cards offer promotional terms that include zero-percent APRs for a set period of time or free balance transfers along with promotional APR pricing.

If you opt for balance transfers, aim to pay off the balance before the promotional period ends—otherwise, you’ll start accruing interest at a high rate.

6. Track your progress and make adjustments if needed

Use a money management or debt tracking tool to chart your progress with debt payments. Ideally, you can create a timeline for debt repayment goals and use your progress to make sure you’re staying on track.

If you are struggling to stick to your plan, you might need to make certain changes. Maybe the interest accruing on your debts is making it tougher to pay them off as quickly as you like. Or you might need to make more room in your budget to accommodate higher payments until you start to pay off your debts.

It’s easy to feel stuck when you’re in debt, but there are plenty of strategies, as well as debt repayment and savings tools, to help you make gradual progress that leads to a debt-free future. Have questions about your financial situation? We can help! Get in touch with a member of our team here.

Download The Definitive Guide to Paying off Credit Card Debt 

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