How to Manage Debt: Strategies for Getting Out of Debt

Debt can be daunting but it does not have to control your life, with the right approach, and a plan in place, people can regain control of their financial status. At McCone County Federal Credit Union we strive to assist our members in handling their debt effectively and maintaining financial fitness. Here is a list of things you can do in order to lower your debt and make your financial situation better.

Check Your Current Position on Debts


The first process of managing your debts is to know the exact amount that you owe and to who. List down all the loans you have, credit cards, personal loans, auto loans, student loans and all other balances you owe. For each debt, record the total amount and the interest rate and the minimum monthly payment required. Knowing your debts will enable you to know how to go about repaying those debts effectively.

Create a Realistic Budget


Budgeting is a critical factor for debt and the creation of a positive financial plan. First, write down all your monthly income and all those expenses that remain the same throughout the month, for example, rent or mortgage, electricity, and gas, food expenses, etc. You should set a particular amount of your earnings for the payment of debts. When you track your expenses and cut on unnecessary expenses you’re able to save more money towards paying your debts.

McCone County Federal Credit Union provides the necessary information and recommendations on how to create a budget for your needs.

Pay Off High Interest Debts First (The Avalanche Method)


If you find yourself with more than one debt, the best strategy of reducing interest and paying them as soon as possible is by paying high-interest accounts first. One such method is the avalanche method, where the extra payment goes to the highest interest debt while only the minimum payment is made to all others. Once the highest interest rate debt is paid off, go to the next highest interest rate.

By prioritizing high-interest debts, you can reduce the overall cost of borrowing and get out of debt more efficiently.

Consider the Snowball Method for Motivation


For some people, paying off smaller debts first provides a motivational boost that can be incredibly helpful when tackling debt. This approach, known as the snowball method, involves focusing on paying off your smallest debts first while making minimum payments on larger debts. As each small debt is eliminated, you gain a sense of accomplishment, which can help keep you motivated to continue.

Both the avalanche and snowball methods have their advantages, so choose the strategy that best fits your financial situation and keeps you motivated to stick with your debt repayment plan.

Use Balance Transfers Carefully


If you have high-interest credit card debt, a balance transfer to a card with a lower interest rate or a 0% introductory rate can be a valuable tool for reducing interest costs. However, it’s essential to read the terms carefully, as many balance transfer cards charge a fee for each transfer and may revert to a higher interest rate after the introductory period.

By using balance transfers strategically and paying down the balance aggressively, you can make a significant dent in your credit card debt and save money on interest.

Increase Income or Find Extra Sources of Income


Increasing your income is another effective way to accelerate debt repayment. If possible, consider taking on a part-time job, freelancing, or selling unused items to generate extra cash. Using these additional funds exclusively for debt repayment can help you pay off balances faster and reach financial freedom sooner.

At McCone County Federal Credit Union, we understand that managing debt often requires extra effort, and we’re here to provide guidance and support as you work towards a debt-free future.

Avoid Accumulating New Debt


While paying down existing debt, it’s essential to avoid taking on additional debt. Avoid using credit cards unless absolutely necessary, and focus on using cash or a debit card to cover everyday expenses. By limiting new debt, you can make steady progress toward your goal without backtracking.

It is advised to establish an emergency fund that would have a little extra to discourage you from using credit. In this way, you can keep up with life’s surprises without derailing your debt payoff strategy.

If you need help, don’t hesitate to consult professionals.


While there are people who can handle their debt on their own, for others it may be a problem that requires the help of a financial consultant. A credit counselor can guide you, assist in developing a repayment plan, and even deal with your creditors. For those people who require further help, there are nonprofit credit counseling agencies.

McCone County Federal Credit Union is also concerned with the welfare of our members financially and we can assist you find solutions on how to deal with your debts.

Plan for Success, then Reward Success


It is always a long-term process to pay off the debts and therefore it is good to take small achievable targets and celebrate once you achieve them. For instance, when you have cleared a particular amount of debt or you have reached a certain percentage of your intended debt to pay. Rewarding yourself might also help you maintain your motivation and commitment to the task at hand.

Rewarding doesn’t always mean you have to spend money on it; it can be as easy as doing something you like or telling a friend or family member about your progress.