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Debt Management

Organize what you owe, pick a payoff strategy and get to debt-free faster.

By Fountain Finances Editorial TeamUpdated

Start with a complete list

Managing debt begins with seeing all of it in one place. List every debt with its balance, interest rate, minimum payment and due date. Many people find the total lower — or higher — than they expected, and either way the list turns a vague worry into a concrete plan.

Choose a payoff strategy

  • Avalanche: pay minimums on everything and put every extra dollar toward the highest-APR debt. Mathematically the cheapest.
  • Snowball: put extra money toward the smallest balance first for fast, motivating wins.
  • Consolidation: combine debts into one lower-rate loan or a 0% balance transfer card.
  • Debt management plan: a structured repayment plan through a nonprofit credit counseling agency.

Compare the first two in our guide to debt payoff strategies, and see whether debt consolidation could lower your rate.

Debt management tips

  1. Never miss a minimum payment — set up autopay for at least the minimum on every account.
  2. Stop adding new balances to the cards you are paying off.
  3. Ask your card issuer for a lower APR, especially if you have a record of on-time payments.
  4. Build a small emergency fund so surprises do not undo your progress.
  5. Celebrate each paid-off account and roll its payment into the next debt.

Get help if you need it

If your payments are unmanageable, reputable nonprofit credit counselors can review your budget and options. Look for agencies affiliated with national nonprofit associations, and avoid any company that charges large upfront fees or guarantees to erase your debt. The CFPB’s debt resources explain your rights, including when a debt collector contacts you.

Frequently asked questions

What is a debt management plan?

A debt management plan (DMP) is an arrangement set up through a nonprofit credit counseling agency. You make one monthly payment to the agency, which pays your creditors — often at reduced interest rates the agency negotiates. Plans typically last three to five years.

Is the avalanche or snowball method better?

The avalanche method (highest interest rate first) saves the most money. The snowball method (smallest balance first) delivers quick wins that keep some people motivated. The best method is the one you will stick with.

How is debt settlement different from debt management?

Debt settlement companies try to negotiate a lump-sum payment for less than you owe, often after you stop paying creditors. It can seriously damage your credit and involves fees and risks. The CFPB and FTC warn consumers to be cautious.

Part of our Personal Finance hub and our complete personal finance guide. Read our editorial standards.

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