10 Tips to Manage Your Debt
Article
Debt
Published: 07/15/2025
Read Time: 6 min
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Managing your personal debt is an important part of maintaining your financial health and achieving your long-term goals. While debt isn't evil, debt is not your friend. Treat debt like fire. Fire can be useful to you but can also burn you.
Here are 10 tips to help you manage your personal debt effectively. Why 10 tips? Because it's a nice round number. If we included `11 you would be exhausted by the end. If we only had 9 you would feel shortchanged:
- Start by creating a budget plan that outlines your income, expenses, and debt payments. This will help you to understand your financial situation and identify areas where you can save money. Be sure to distinguish the part of your debt payments that go to interest and principal. Paying more principal consumes more of your budget but also means you pay your debt of faster and pay less interest over the life of the loan. Managing your budget is the flipside of managing your debt. Do you really need that iPhone 15? Tim Cook says you need it, but you know the 14 (or even 12) is perfectly fine. And unlimited data? No. How about reading a book? Or ever hear of wifi?
- Make a list of all of your debts, including the creditor, interest rate, minimum monthly payment, and balance. This will help you to prioritize your payments and make a plan to pay off your debts. You can use our debt analysis tool. Make sure to include whether the interest rate is fixed or floating. In the recent jaw dropping catapulting of interest rates many borrowers were unaware their debt was floating rate. Had they been aware they could have fixed their interest rate when interest rates were historically low.
- Target your most expensive debt for faster paydowns. Did we really need to say this? Certain loans carry prepayment penalties and may not provide full benefits of excess paydowns. Talk to your lender about the consequences and reporting of extra payments (Eg if you make a double payment you want o understand if the extra payment is applied to principal or will be considered the next monthly payment).
- Consider consolidating or refinancing your more expensive debt. This may be difficult if your credit score and/or your income isn't strong. However, for those with good credit and income, you're not stuck with high priced debt. You have options. And who doesn't love options?
- Make more than the minimum monthly payment on your debts, if possible, to reduce the amount of interest you pay and speed up the process of paying off your debts. This is particularly important for credit card debt which is usually most expensive and has low minimum payments. Dedicating part of your budget to paying down high cost loans will pay big dividends in saved interest. It may be painful at first, but you will win big in the long run? You trust us don't you?
- Freeze your debt now! Do mot take on additional debt, and try to live within your means by cutting back on discretionary spending and increasing your income, if possible. Here is a little tip. You know that Turkey sandwich you paid 15 bucks for at that fancy deli near your office? Here is a free tip from us. Take 2 slices of bread, some nice honey roasted turkey, slap on a tomato, lettuce, a nice cheddar cheese and some mayo and bing bang boom I just saved you $14.50. Do this every day and that saves you $435/month. You can thank me later. Or treat me to one of those fancy turkey sandwiches you don't need to buy anymore.
- Start with your most expensive debt (in terms of size and interest rate) and call your lender. What are you waiting for? Do it now!! Try to negotiate better interest rates and repayment terms. It's important to do this before you get in trouble but even if you've missed payments a lender may be willing to renegotiate your debt to help you avoid default. Unless you rather spend your hard earned money keeping your banker in a cushy lifestyle with his mansion and his yacht (and yes it is generally a he).
- Seek advice and support from a financial counselor or debt management program if you are struggling to manage your debts. But please ask and carefully consider any fees they charge. Last think you want is to get ripped off by somebody you hired to help with somebody you think is ripping you off.
- Be aware of the risks and consequences of not paying your debts, such as late fees, damage to your credit score, and legal action.
- Use tools and resources, such as budgeting apps and online calculators such as those provided by TPE, to help you manage your debts and make informed financial decisions. Below we have a link to our debt calculator. TPE even has a peer-to-peer loan calculator to help you reach terms with a friend or relative who may lend you money on better terms.