The Simple Guide on Managing Debt

Borrowing money helps us to make major purchases and spread out costs over time. It’s an invaluable tool that helps people and businesses grow. But you must have a debt management plan in place to make sure your debt does not spiral out of control or negatively impact your finances and future.

Currently, Americans collectively have over $4.2 trillion in outstanding debt. While debt can be a powerfully helpful tool, unchecked, it can create headaches. Understanding the risks accompanying debt, the debt management options available and the tools and apps to help you live the life you want can set you on the right path.

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In this article

    Ways to manage debt faster

    The quicker you can manage your debt, the more you can save on the cost of borrowing and the faster you can turn around your financial future. When it comes to getting out of debt fast, there are plenty of steps you can take right now to get things moving.

    • Pay more toward your principal. The best way to get rid of debt is to allocate more of your financial resources towards paying it off. Make sure when you pay extra or pay more often that you instruct the company to put that towards your principal and not the interest costs. The minimum payment is only a requirement; you can pay more if you want.
    • Speak with a debt counselor.There are trained professionals with decades of experience helping people get out of debt. If you are trying to formulate a plan forward, talk to a trained debt counselor. Generally, your bank, state or lender may have theses resources available free of charge.
    • Increase your income. Picking up a side hustle or getting a part-time job can increase the money you have coming in. Allocate these extra funds toward your debt, and you’ll be well on your way to speeding up the process.

    In what order should I pay off my debt?

    There are several schools of thought when it comes to what order you should pay off your debt. Financially speaking, it’s always best to pay off the highest interest debt first. Other methods, like the snowball method, have you stray from this to help you mentally commit to the process. If you need the boost, go for it. But if you want to save the most, focus on paying your debt in this order.

    • The minimum payments: Always start by making your minimum debt payments to all accounts so that you protect your credit.
    • The most expensive debt first: When you have extra funds to allocate to your debt management plan, push it towards your most expensive debt first — any debts with APRs over 7%.
    • Variable rates first: If you have two debt accounts with roughly the same cost, you’ll want to pay off any variable rates first. While these rates may even be slightly lower, they can become the most expensive without warning. Clear these debts out first before focusing on the more stable, fixed-rate debts.

    The best debt repayment tools and apps

    Technology is your friend when it comes to debt management and repaying what you owe. Many debt management apps offer transparent tracking, advising on what to pay next and even unique ways to get ahead.

    For example, Qoins is a debt management app that follows the model of purchase-rounding apps, except applies it to paying off debt. The app rounds all purchases up to the next whole dollar and then deposits the differences as a debt payment. Similar to Quoins is an app called Changed. The app operates on the same spare-change principle, except it is dedicated to paying off student loans.

    The emotional effects of debt

    The cliché phrase that debt is a “weight on your shoulders” could be one of the most accurate clichés. When you’re carrying debt, it can be disheartening to see part of your paycheck every month head out the door to someone else. Additionally, it can make you feel behind the curve and in a rut that is tough to get out of. After a while, these feelings can continue to compound, just like debt. While the burden of paying debt might not be as clear when you make the purchase or take out the loan, it becomes clearer, especially when loan payments stretch out over what seems like an unending stretch of years.

    The best things that happen after paying off debt

    Peace of mind — The weight lifted off your shoulders when you get out from underneath debt is an indescribable feeling. Not only will you feel better and feel accomplished, but you’ll also see tangible benefits. Your credit score should go up, and your financial future brightens. If you’re working towards a larger purchase like a home, this can clear the way for you. Or you can stay debt-free and enjoy the added income coming in every month that used to go towards debt payments.

    Jason Lee

    Contributing Writer

    Jason Lee is a U.S.-based freelance writer with a passion for writing about dating, banking, tech, personal growth, food and personal finance. As a business owner, relationship strategist, and officer in the U.S. military, Jason enjoys sharing his unique knowledge base and skill sets with the rest of the world. Follow Jason on Facebook here

    Reviewed by

    • Courtney Mihocik
      Courtney Mihocik
      Loans Editor

      Courtney Mihocik is an editor at The Simple Dollar who specializes in personal loans, student loans, auto loans, and debt consolidation loans. She is a former writer and contributing editor to,, and elsewhere.