What’s The Best Way To Manage Debt?

Managing debt effectively involves organizing your finances, having good financial strategies, and having the discipline to work at and maintain good practices. Here’s how you can tackle it:

1. Know What You Owe

Make a complete list of your debts. This should include:

• Creditor name
• Balance
• Interest rate
• Minimum monthly payment
• Due date

2. Choose a Payoff Strategy

There are two popular approaches for paying off debt. 

Debt Snowball 

This approach is very motivating in seeing more rapid progress. 

• Target your smallest debt balance first.
• Pay minimums on all others.
• Put any extra money at the smallest debt until it’s gone, then move to the next one.
  

Debt Avalanche

This approach saves the most in interest, but it can take longer to see progress.

• Target your highest interest rate first.
• Pay minimums on the rest.
• Put any extra money on the most expensive debt.

3. Review Your Expenses to Cut Costs & Boost Income

• Create a realistic budget and stick to it.
• Eliminate or reduce non-essentials (subscriptions, going out to eat, etc.).
• Consider side gigs or freelancing to increase your cash flow.

4. Avoid New Debt

• Stop using credit cards until you’re in control.
• Delete saved cards from online accounts.
• Use a debit card or cash for spending.

5. Automate Payments

• Avoid late fees by creating automatic payments.
• Helps protect your credit score by ensuring you don’t miss any payments.

What Non-Profit CCOA Does to Help

Free Financial Counseling Sessions
CCOA offers free financial analysis sessions where a certified financial professional reviews your finances: income, expenses, debts, etc.  Your financial professional will help you build a realistic budget and financial plan. Make your free appointment today.

A Debt Management Program
If appropriate for your situation, CCOA may recommend a Debt Management Program (DMP). This is a program where your creditors may give you better terms – things like lower interest rates, stop late fees and stop over the limit fees, and lower your monthly payment to make it more manageable.