Skip to content
Action Plans

4 Effective Ways to Manage Debt

Father And Son Celebrating Being Debt Free- Thumbnail

If you’ve managed to go this long to stay out of debt, congratulations, you’re one of the few. According to a report from Pew Charitable Trusts, 80 percent of Americans are in debt. That may sound like a huge number, but much of that debt is due to owning a home, and not all debt is necessarily a bad thing. It’s when that debt load becomes too big to manage that problems arise.

If you’ve managed to get out of debt, you’re also due for some recognition. It takes self-reflection, organized planning and some will power to get out of a challenging  financial situation, and it’s certainly not as easy as it sounds. And while you may feel the impulse to celebrate, it’s important to keep improving your financial standing.

Here are four effective ways to stay out of debt.

1. Set Realistic Goals

We’d all like to save the majority of our income, but is that a realistic goal? Take a close look at your financial situation and set a goal that isn’t out of reach. Setting and reaching smaller goals will give you a sense of accomplishment and encourage you to keep going. There is no one-size-fits-all approach for continuing to stay out of debt, so do your research and keep things simple.

2. Team Up

You’ve probably heard of a workout buddy; someone that you can team up with to make sure you’re regularly exercising. Use the same concept with your finances. Join Couple Renovating Homeforces with your spouse, sibling, co-worker or anyone else that will encourage healthy financial habits. This strategy is most effective if your “accountability partner” is more skilled than you at managing finances. Lean on them for advice, and set up regular reviews to make sure you’re sticking to your goals to stay out of debt.

3. Do It Yourself

You don’t have to be an HGTV host to save some money around the house. Seek out online tutorials or ask a friend or family member to teach you how to remodel a room or change your oil. Not only will you help yourself stay out of debt, but you’ll now have these skills for life and you might even find a new hobby or a profitable job on the side.

4. Set Up an Emergency Fund

According to a report from the Federal Reserve, about two-thirds of Americans ages 18-59 haven’t set aside an emergency fund that would cover expenses for three months. In the case of an unexpected event, this fund keeps you from taking on more debt to make ends meet. Consider contributing to this fund after each paycheck, even in small amounts as these contributions can quickly add up.

If you’re still working to get out of debt, it’s important to know your options. Debt consolidation is a strategic financial plan that can lay the groundwork for a more financially stable future. Debt consolidation allows you to roll your debts into one monthly payment, with a lower interest rate and convenient payment schedules for the borrower.

There are plenty of programs and in-depth analysis available on how to get out of debt. But it’s often the simplest strategies – like not getting into debt in the first place – that are the most effective. Many of the same strategies you used to get out of debt will help you stay out of debt.