The #1 Secret of Successful Debt Management

Young couple in front of laptop

By Tracy Scott

If you’re struggling to pay creditors each month, you already know that adding to account balances could make matters much worse. Hoping to ease the financial strain, you’ve likely tried to reduce expenses. While you (sometimes) skip your Monday morning latte and (occasionally) brown-bag your lunch on Fridays, the savings aren’t having the impact you’d hoped.

These efforts are a good start, but the few extra dollars applied to your debt each month don’t seem worth the effort. Fortunately, there’s a way to conquer debt and regain control of your finances. Lifestyle changes can free up cash to pay off debt, but without doing this one thing, debt management can seem impossible.

The number one “secret” of successful debt management is to follow a debt reduction plan. When you have a clear strategy that details how and when you’ll eliminate debt, you can:

  • Watch your credit account balances fall each month
  • Use the results to stay motivated
  • Free up cash to achieve other financial goals

Developing an effective debt reduction plan requires a realistic look at income, debt load, and payoff timeline. Start by asking yourself these questions:


  • Do I have a monthly budget? Am I following my budget?
  • After paying all necessary expenses, how much money do I have available for debt payments each month?

Debt Load

  • What is the current balance of each of my credit accounts?
  • What is the interest rate assigned to each of my credit accounts?

Payoff Timeline

  • If I only make the minimum payments on my credit accounts, how soon would they be paid in full? How much interest would I pay? (NOTE: Credit card statements contain a minimum payment warning that provides these figures.)
  • How soon would I like to pay off my credit accounts? How much interest would I save?

With these figures and a timeline in mind, you can decide how you’ll achieve your debt reduction goals. Use one or more of these actions to create a debt reduction plan, and you’ll be debt-free sooner than you think.

Consolidate your debt obligations.

Depending on the interest rates assigned to your current credit cards and loans, taking out an AFFCU Personal Loan to pay off those debts can save money and lower your monthly payments. If you’re unable to increase your total monthly debt payment, a lower interest rate Personal Loan can make the most of every debt reduction dollar. Since the new loan should have an interest rate lower than your previous debts, more of your payment can be applied directly to the principal balance instead of interest charges.

Increase your income.

Speed up your debt reduction plan by working overtime or taking an additional side job. The more money you have to pay off debt, the sooner you can become debt-free. Any payments made that are larger than the required minimum are typically applied to the principal balance. Ensure funds from your new income source go directly toward debt balances and not frivolous spending.

Systematically pay more than the minimum, but don’t stop there.

By increasing your income, you’ll have the necessary resources to tackle debt and regain control of your finances. To get out of debt sooner, embrace a systematic approach to paying off one creditor at a time.

Submit more than the minimum required monthly payment on at least one of your debt accounts until it’s paid in full. Continue to make the required minimum payments to the other creditors. After an account is paid in full, add what you’d ben paying to the first debt to the next account you’d like to pay off. This “snowball” debt repayment method can wipe out debt fast and keep you motivated throughout the process.


Congratulate yourself when you reach your debt reduction plan goal. You’ve taken a significant step toward improving your financial life. Successful money management takes consistent effort, but the rewards can last a lifetime.