First Steps of Debt Management – Ready, Set, Go!

Debt Management first steps
Debt management helps you erase debt and anxiety.

The average U.S. household has more than $15,000 in credit card debt. It’s no wonder then in Madison “credit counseling“, “debt management” and “financial planning” have become familiar concepts and sought after services for so many. But the daunting truth is those same households with the credit card debt are more than likely also carrying student loan and/or mortgage debts. Thankfully, my personal credit card debt total has always stayed below that national average but still the amount I did have felt like a big burden until I took steps to pay it off.

Get Everything Down on Paper

I started out by accounting for all my debt including the various loans and credit card balances plus their interest rates. With this master list in mind, I ended up tackling the smallest balances first because my personality was such that I needed that initial feeling of accomplishment. Also known as the “snowball effect,” after that smallest balance is paid off you then would add that monthly payment to the next largest balance, and so on. Now depending on your balances and interest rates, it can be worthwhile to tackle the highest interest rate first or refinance to a lower rate credit union credit card. Take some time with an online credit calculator to work out the possible scenarios.

Create a Simple Budget

I then put together a simple budget, accounting for my income and expenses. I knew most of my set expenses including rent, utilities, gas, and food. Harder to nail down were the discretionary or infrequent purchases such as eating out, shopping, insurance, vet bills, etc. Between writing down everything I spent over a two-week period and reviewing monthly statements, I had a pretty good idea where my money was going. At this point, I identified the necessities versus discretionary spending. Eating out, clothes, cable, gym membership, these were areas I could either significantly reduce or cutout altogether. Once I had a better handle on my expenses, I knew how much I had leftover to apply towards debt.

Debt Management – Now What?

One of the biggest lessons I learned from the recession was to pay off debt as quickly as possible. Compounding interest is not your friend here and months or even years of minimum payments add thousands of dollars to even the smallest initial balance. While I didn’t have a mortgage to deal with, I did have student loan and credit card debts that often kept me up at night. Eventually I was able to make a few of the changes I’m suggesting here to not only pay off my debt but also significantly reduce my anxiety in the interim.


Starting with credit cards, contact the company and inquire about reducing your current interest rate. Rather than see you transfer to competitor, many will work with you. If not, start looking at balance transfers and specifically those that offer 0% APR for 12-15 months on transfer balances like the Elan Visa Platinum credit card at Dane County Credit Union.

See where else you can negotiate. While cable is nice, these days internet access allows for multiple streaming choices including Netflix, Hulu and Amazon Prime. Similar to your credit card company, ask to speak with a supervisor or customer retention specialist. Let them know your situation and see what they can do.

If you’re renting, ask your landlord/management company if you can do anything around the unit. I had one apartment that reduced my monthly rent in exchange for vacuuming the common areas biweekly. Another place shaved off $100 monthly for mowing the lawn!

More Trimming

Look again at your budget and see where else you may be able to reduce monthly bills.

  • I moved away from my pricey phone contract to an inexpensive pay-as-you phone plan and now Skype when I can to save even more.
  • I also began working PT at my local gym which provided me with a free family membership. Similarly, working part-time at your vet office or hair salon could easily be worth your while.
  • Comparison shop! While I love Whole Foods and Trader Joe’s as much as the next Madisonian, I found certain items substantially cheaper elsewhere. Whether it’s Aldi, Costco, or your neighborhood farmer’s market, make sure you’re not overpaying. Once you find the best prices, you’ll be much more motivated to brown bag lunch rather than eating out so much during the week.
  • When those new unexpected expenses do come up, I look for a less expensive option out there. From printer cartridges (which can now be refilled for a fraction of the purchase price) to buying glasses/contacts online to certain groceries from Amazon Prime or Walmart’s fixed shipping options, there are so many deals to be had out there.

Increase Monthly Income

Depending on your schedule, this can be a challenge. I began by applying for a seasonal job with plenty of hours through the holiday season. Even better, I was offered a permanent part-time position after the holidays. Had I opted not to stay on, I was still in a great position to reapply the following year. That first seasonal job (and holiday bonus!) made a serious dent in my debt.

I also came across a collection of beautiful mirrors on clearance sale for a ridiculously low price. I knew they were worth triple the asking price so I bought all of them and eventually sold every last one and actually tripled my investment. While this was a unique opportunity, it did open my eyes to selling my household items on Ebay, Craig’s List, and local Facebook group pages. Keeping potential shipping costs in mind, this too can be a lucrative source of additional income for items you no longer need, use or really want.

While these debt management strategies worked for me (more than once), what if you’re not making any headway on your debt? Or you start out strong but lose motivation before returning to old habits? First thing, do not beat yourself up each time you slip. It probably took a while to get where you are, and it will take some time to correct. If tackling it on your own simply isn’t working, that’s when it’s time to call in the big dogs for some professional guidance. Dane County Credit Union has partnered with GreenPath, a non-profit offering DCCU members free credit counseling, debt management and financial education services.

Read on for more about GreenPath Financial Wellness.


Published by

Hillary W.

Hillary is a 2008 graduate of UW-Madison. She is a proud Badger all the way, but her strong love of travelling led her to a graduate program out in Phoenix, AZ, which she absolutely adored. Now, back in Madison, Hillary is once again connected to her Wisconsin roots. In the winter, you can find her on the ski slopes whenever she has time. In summer, she's on the bike path or enjoying a good book along any stretch of lakefront. Also a passionate Mallards fan, look for her at Warner Park whenever a game is in town!