Debt Management

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When tackling debt, it’s essential to take an organized approach. Managing debt helps you stabilize your financial situation so there will be monthly funds to save or pay down debt.


8 Steps To Reduce Debt


  1. Live within your budget: If you’re trying to reduce your debt, creating new debt doesn’t help. If you don’t have a budget, develop one. Examine your income and monthly expenses and ensure your income column is equal to or greater than your expenses.
  2. Pay your bills by the due date: Late fees are an unnecessary expense that cuts into your discretionary income.
  3. Pay off high-interest credit cards. Ideally, they should be paid in full each month, but if that’s not possible, focus your debt repayment efforts on paying off your credit cards (and loans) with the highest interest first.
  4. Pay more than the minimum: If you can’t pay off your credit card balances, always pay more than the minimum and curtail building new charges. Paying the minimum will extend the time it takes to pay it off and will increase the interest burden you bear.
  5. Use automated payments: This ensures your bills are paid on time. It’s also an excellent way to avoid spreading yourself too thin and reaching the end of the month with insufficient funds to pay your bills. But, of course, you must keep your balance high enough to cover those auto payments!
  6. Only take on new debt when there is no other option. Don’t apply for new credit if there is no urgent need. Having too many accounts with balances makes payments challenging to manage. It also can lower your credit score.
  7. Consolidate your debt: Check debt-consolidation options periodically. For example, home equity loans with a lower interest rate are an excellent way to pay off high-interest-rate credit cards. Besides reducing the number of payments, the money saved on interest can be used to reduce your debt further.
  8. Keep a rainy-day fund: While it’s good to keep paying down debt, setting aside some income into savings is critical. It will help cover unexpected expenses without depleting your savings or creating more debt. For example, if your furnace goes out or your car needs new tires, a sufficient emergency fund can help you pay for them without hampering your debt management efforts.

As you get control of your debt, check your credit score periodically. Make sure it’s accurate, and look for areas where you can improve your credit and raise your score. You can get your credit reports free at

One of the most important aspects of debt management is being aware of your debt’s magnitude and being vigilant for opportunities to reduce it. Do that, and you’ll get debt under control and improve your financial future.

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