Managing Debt

Managing Debt

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Unfortunately, the total amount of consumer debt in the United States is about 13.86 trillion. The average American has about $38,000 in personal debt. Debt not only ruins credit as it can also lead to negative emotional effects like low self-esteem and stress. Luckily, there are ways to take control of your debt.

Debt Basics

Debt is the money someone owes to someone else or to an institution. People often acquire debt when making large purchases that they need to borrow money for. Debt occurs through credit cards or when taking out loans.

Debt can be good or bad depending on the circumstance. If you are able to pay off your loans on time, then debt isn’t that bad. You can use debt calculators like this one and this one to predict when you are expected to pay off your debt. However, if you owe money that you can’t pay back, then debt is bad and you may face legal issues. A good rule of thumb is to try to minimize the amount of debt you have.

Managing your debt

If you are struggling to pay off your debt, you need a plan. Here are some simple steps you can follow to help pay off your debt.

  1. Make a list of all your debts

Write down exactly what you owe and who you owe it to. You can reference your credit report, which you can obtain from here. Make sure to list out all the details, like the due date and the monthly payment.

It is very useful to know the interest rate for your loans because you will be able to know exactly how much your debt is costing you. Instead of simply looking at your monthly payment, you can use this loan calculator to see how much your debt is actually costing you.

  1. Make minimum payments on time

When you pay a bill late, you could be charged a late fee, which makes it even harder to pay it off. Furthermore, paying your bills late will damage your credit score and may cause your interest rates to increase. As a result, you should strive to at least pay the minimum amount required by your loans. 

In order to ensure you pay your bills on time, you could refer to the list of all your debts and their due dates and set reminders in your phone’s calendar each time they are due. You should write each bill’s payment amount on the due date in your calendar and add the date of each paycheck in order to figure out which paycheck will pay for which bills.

  1. Prioritize Debts

You should rank your debts and determine which ones to pay off first. There are many different debt repayment plans that people choose. One strategy is to pay off the debt with the highest interest rate first. This usually involves paying off credit cards as credit cards tend to have the highest interests. Another strategy is to concentrate on paying off your smallest debt first.

  1. Get help if you can’t pay your debt

The first thing you should do is to call your lender and tell them you can’t pay. Many lenders are willing to work things out with you and work out a payment plan with you until you earn more money. You can also get help from debt relief companies. However, make sure you do your research as some debt relief companies are scams.

  1. Make a budget

Write out everything you are spending money on and look at where your money goes and where you will be able to save money. Then, write a budget that limits unnecessary spending and takes in consideration your debt repayment plan. A budget will help you plan in advance so you will be able to see if you do not have enough to cover your expenses or if you have more than enough.

  1. Monitor your efforts

Monitoring your progress on paying back your debt can help you stay motivated. You can use sites like or physical representations that will help you track your progress to see how fast your debt is declining. As your debt declines, your credit score should go up, which can motivate you to persist.

  1. Plan for the future

Save up for an emergency fund. It can be hard to balance paying back debts and saving money, but an emergency fund is essential because if anything unexpected happens in the future you will have a cushion to lean on. Without some savings, you may find yourself stuck in an interminable cycle of debt.


By taking steps to control your debt, you will be able to make money work for you. Managing debt is a key role in maintaining your financial well-being and ensuring you have money for future expenses.

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