Not All Debt Is Bad: 6 Ways to Manage Your Financial Debt

By carefully managing debt, borrowers like you can utilize it to their advantage and pave the way for financial success. Whether taking out loans or engaging in cash advances, if used strategically, you can use it as a stepping stone towards achieving your desired goals.

Discover these financial-guru recommended strategies for managing and reducing your financial debts today!

1. Know How Much You Owe

The first step to clearing your debt is understanding how much you owe. Make a comprehensive list of everyone you own, including the creditors, and the total amount you are expected to pay monthly. Use your credit report to confirm if your list is complete.

Note: Having all your debts in one place will give you a bigger picture of your debts. You can also employ the help of a financial advisor to help with the process.

2. Have A List of the Minimum Payments

If you cannot afford to make huge payments, you can at least start with the minimum payment. The small payments might not help you make real progress with paying off your debt, but they will help you keep yourself in a good book with your creditors and help you avoid late fees.

Note: If you are trying to reduce your debt, you might want to avoid using credit cards. Instead, carry cash to help you stick to your budget.

3. Pay Your Monthly Bills on Time

Late payments will make it harder for you to pay off your debt since you will often have to pay for the late fees. If you use an app or software  on your smartphone or computer, you can enter your payment details and set an alarm to remind you to pay your bills on time. If you miss a bill, ensure that you do not wait for the next due date to send the payment, you could quickly be reported to the credit bureau.

Note: Ensure you send your payment as soon as you realize you have missed it. Additionally, having a budget to help you know how much you need to spend on your bills is a great idea. This way, you can quickly see how much money you are earning and where it is going.

4. Decide Which Debts You Need to Pay Off First

It is always a good idea to pay your credit card debt first. Credit card debts often have higher interest than most other debts you might have accumulated. Check out all your credit card interest rates and start with the one with the highest interest rates since it costs you the most.

Note: Utilize a debt list to help you rank your debts from the one with the most interest rate to the one with the least. You can also start paying off the debt with the least balance to help you build confidence when dealing with debts.

5. Build an Emergency Fund

Most people get into debt because they do not have some savings to help in an emergency. An emergency fund will help you cover some expenses that come up once in a while. Start by creating a small emergency fund of around $1,000 according to Dave Ramsey. Once you hit your first $1,000, you can work upwards towards bigger goals. Eventually, you want to build an emergency fund big enough for about three to six months of living expenses.

Note: Ensure you develop a comprehensive list of things to use for your emergency fund. Differentiate between a need and a want to avoid unnecessarily taking away from your emergency fund.

6. Consider Debt Consolidation

It is essential to recognize when you need help. If you find it hard to start pay your monthly debts, you may want to seek help from a professional. A credit counseling agency is a great place to start. A credit counselor will help you consolidate debt, making it easier to pay off. Other options you can seek include debt settlement, consolidation, and bankruptcy.

Debt consolidation involves rolling all your debts into one product to help you make a single payment at lower interest rates, including personal loans.A personal loan often has a lower interest than most credit cards. Debt settlement involves negotiating your debt with your creditor to settle less than you owe. Most creditors will, however, only settle a debt that isn’t current.

Note: Every one of the above solutions has its pros and cons. It is, therefore, essential to ensure that you weigh them carefully before choosing any.


Managing your debt is an essential part of your financial plan. You can follow the above steps to get out of debt and talk to a financial professional to help you deal with the debt. It is also vital to understand the difference between good debt and bad debt. This way, you will be able to keep a healthy credit score which will keep you financially healthy.

Key Takeaways

  • Build an emergency fund to fall back on in case of a financial emergency.
  • When making a clear debt repayment plan, ensure you have a list of how much you owe and who you owe.
  • Payoff your small debts first to help you build your confidence.

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