• Shelby Green

How to Get Out of Debt Pt 2: 3 Important Debt Management Strategies

There are so many Americans who are drowning in debt. The experience of struggling with debt can be immensely overwhelming and stressful. If you identify with that, no worries! You are definitely not alone. And it’s not something that you can’t overcome. But it is up to you to do what it takes to make it happen.

If you’re serious about getting yourself out of debt, make sure you know about these 3 important strategies.

STRATEGY #1: Be Consistent

We all know that consistency is one of the most important skills in adulting. It’s also something that a lot of people struggle with. If this is you, try to think about it as an element of self-care - it’s really about showing up for yourself. And it’s not a coincidence that it's also one of the core pillars for maintaining your financial health.

Consistency is the most important thing when it comes to paying off debt - especially with credit cards.

My #1 advice when it comes to handling your debt? Come up with a consistent number (at the very least, the minimum amount required) to pay off at the same time, every single month.

This is much better for your financial health in the long run, as opposed to making arbitrary big lump sum payments at random times. It will keep you on a consistent track for success, and help cultivate an important habit and life skill.

And, it’s better for your credit.

STRATEGY #2: Pay your debts off in an order (for those with multiple credit cards and other debts.)

The overall strategy here is to reduce the number of entities to which you owe money. E.g. it’s better to have 2 companies you need to make monthly payments to than 5.

There are 2 factors to consider when working with this strategy.

  1. How much you owe to each company.

  2. How much the interest is on each of your respective debts.

Note that you should always be making the monthly minimums for all of your debts. This strategy comes into play when you have the ability to pay beyond the minimum.

My #2 advice for handling your debt is to focus on eliminating one debt at a time. But how do you choose which one to tackle first?

First, prioritize the ones with the highest interest rate, and get rid of those first.

If they all have kind of around the same interest rates (within 5-7%), tackle the ones with the lowest balance first.

In this way you can knock out your debts one by one - slowly reducing the number of companies that you owe money to. It looks better on your credit reports to be in debt with a smaller number of companies than a large number of them.

STRATEGY #3: Debt consolidation

This is a useful strategy for people who have debts with several different financial institutions and are having a hard time paying off their debts.

This is a strategy that is used usually when the person is in a tough spot and is unable to make their monthly minimums. Perhaps they have fallen behind in their payments, and do not have many other financial options available to them.

My #3 advice for handling your debt when strategies #1 and #2 are out of reach, is to consolidate.

When you consolidate your debt, you are taking all of your various debts and collecting them into one place. So instead of paying multiple companies each month, you just make one payment to the debt consolidation agency to cover everything.

More specifically, it means that you are making a deal with one company. That company will then make a deal on your behalf with all of the other companies to which you owe money, and arrange to pay off your debts.

The debt consolidation companies in essence “settle” your debt. Which really means they make arrangements with each of your debtors to buy your debt at a lower amount than what you owe. They then sell the debt back to you, at a higher amount than what they paid for, but lower than what your total debt was originally.

Here’s an example to illustrate how this works. Say you owe 4 credit cards $2500 a piece, making a total debt of $10,000.

The debt consolidation company buys that $10,000 debt from your credit card companies by making lump-sum payment deals with each of them. Let’s say they successfully purchase all of your debt with lump sums amounting to a total of $5000.

The debt consolidation company, once they have bought your debt, can sell it back to you for $7000 (so now you owe one company $7000 instead of owing 4 companies $10,000.

You would then make arrangements with the debt consolidation company to pay them one monthly payment for a period of time, until you have successfully paid off your $7000 debt.

Now, on a surface level this may sound like a pretty sweet deal, but be warned this option also comes with its fair share of downfalls.

Here are the Pros & Cons of debt consolidation.


  • You are paying less money overall (in the example above you are paying $7000 instead of $10,000 over an agreed upon period of time, which means you “saved” $3000)

  • Your overall monthly payment could go down.

  • You will have an established date that your debt will be paid off.


  • On the front end, your credit score will go down. This is because your obligation to pay back the money you borrowed in full is compromised. Which means, now you are less attractive to banks.

  • You lose the ability to use the credit cards involved in the consolidation, until the end of the period.

  • If you plan to purchase a house, being in a period of consolidation is going to be a huge hurdle. Remember the part about being unattractive to banks? In practical terms it means you may not be able to successfully get a mortgage while still in consolidation. So most likely you will need to wait until your consolidation is paid off, before you are able to get a mortgage from banks & lenders. This is mainly because mortgage approvals depend on your credit score, and consolidation definitely negatively affects your credit score in a significant way.

So there are my top 3 strategies to consider when you find yourself in debt!

I also want to remind you that proactive measures are really important, so that you don’t end up in a situation where the only option you have is to consolidate your debt, because you can’t make the payments.

Part of the larger strategy here is to watch your spending, and stay within your means. If you do need to use a credit card, make sure you have the money to pay it off immediately (i.e. already have the money in the bank before you swipe). Budget properly, and stick to it.

Many people go into credit card debt also because of an unforeseen emergency. This is why I always talk about the importance of building and keeping an emergency fund.

Remember that preventative measures are far more effective than reactive ones. It’s a lot harder to clean up a mess, than it is to take precautionary steps so that you don’t make a mess. But we understand that sometimes, life just happens. You can’t predict everything.

But you CAN learn and implement strategies available to you to make sure you maintain your financial health, to reduce the chances of going into debt. For more resources on how to be more proactive about building up your financial health, check out our other blog articles available at

If you need further assistance, don’t forget that you can book a complimentary strategy session with us anytime to help you get on track!

Stay healthy everyone, in all of the ways - including your finances!

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