Coming Up With a Debt Management Strategy

Miss Money Bee by April Lewis-Parks

Debt is a burden no matter what your age is, but when you’re in your 20s and 30s, credit card balances, student loans, auto and housing costs can be downright crippling. When you’re just starting out or at a point where you’re trying to amass some kind of savings and investments, any additional debt you take on hurts your ability to save – or splurge on traveling and experiencing new things before those big-life decisions come into play.

The good news is that with smart planning and budgeting, you can cut into that debt and still save money for your future, even though it sometimes feels like you have to make a choice between the two. And while that $30,000 student loan payment may not disappear overnight, coming up with a sound debt management strategy can help you pay down your balance more quickly.

1. Total up your payments
Student loans, credit cards, retail cards -any type of debt that cuts into your income should be included in this list. Keep in mind that a mortgage is a much larger investment that will not be paid off in the next five or 10 years, so this can be left off your debt list. Right now, you are focusing on balances that are not helping you build equity or own an asset in the way that owning a home or paying down an auto loan can.

2. How are you prioritizing these expenses?
Do you only pay the minimum on your credit cards? Are you paying more on the high-interest rate cards than the lower-interest rate cards? What type of student loan repayment plan are you enrolled in? These questions are important in determining whether you are maximizing your payments. For example, if you are putting more money toward credit cards with lower interest rates, while only paying the minimum due on high-rate cards, you are not maximizing your payments. It’s always better to pay down high-rate cards – this includes retail lines of credit that generally have higher rates – than low-rate cards because it limits the amount of interest you are accruing.

3. Have you explored other options?
When it comes to student loans, have you consolidated your balances to be locked into one low rate? Are you on an extended repayment plan when you can afford to be on standard plan? You know more than anyone does what your payment priorities are, and if eliminating this type of debt is your primary concern, it may be time to speak with a professional about other payment options that allow you to pay down your balance faster.

Remember the time to act is now! It is always a great idea to look at your financial standing and if your money is working for you or against you! Financial Literacy Month is the perfect time to take control and revamp how you think about bills, income and debt. At you can find calculators, free booklets, sections on how to deal with your credit score and your credit reports as well as much more!