5 steps to DIY debt management

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If you’re in over your head with debt, your inclination may be to call a credit counseling service. But if you can swing it, there are benefits to doing your own debt management.

“First, you save on cost because these agencies charge a fee,” says Andrea Travillian, a personal finance coach in Omaha, Neb. “You could save that extra money and put it toward your debt.”

“Second, it can actually damage your credit to go through them. Sometimes, it can appear almost, if not quite, as bad as bankruptcy,” she says.

Ready to go it alone? Use some of these debt management tips to start digging yourself out of a financial hole.

Don’t delay taking action

If you feel yourself starting to drown in credit card debt and other payments, start tackling debt management before it worsens, says Gail Cunningham, spokeswoman for the National Foundation for Credit Counseling in Silver Spring, Md.

“The longer you delay … the harder it is to resolve,” she says.


If you can’t decide which expenses to pay first, Cunningham advises you to concentrate on your basic necessities, like mortgage, electricity and groceries. Many consumers will pay lower-priority bills first to stop phone calls from debt collectors, but it could leave them without a home.

“If the creditor is happy but the lights have been shut off, they’ve paid backward,” Cunningham says. After basics are covered, money should go toward paying secured debts like car payments and then unsecured debts like credit cards.

Snowball your debts

If you have several credit card bills, Travillian suggests using the “debt snowball” method to eliminate them one by one. To snowball your debts, pay the minimum monthly payment on every card except one. Roll any extra money into paying the balance on that one card.

Once one card is paid off, choose another card to pay down. As the bills are eliminated, you’ll find that you have more available cash to pay off your remaining card balances. “You can start knocking out your debts right away instead of spending your extra money on manicures,” Travillian says.

Reach out to creditors

If you find it impossible to make even the minimum payment on a particular debt, it could be beneficial to call the creditor and ask if the company would accept a lower monthly payment or consider other arrangements, Cunningham says.

“You should reach out to them and see if they have any programs that might help you,” Cunningham says. Many companies may be willing to accept a small payment rather than no payment at all.

Stay strong

If you’re attempting debt management without a credit counseling company negotiating on your behalf, the phone calls from creditors can be nerve-racking. Do-it-yourself debt managers will need a strong backbone to withstand the pressure.

“It’s hard because they’re relentless and not nice,” Travillian says. “You can take an emotional beating.”

If you do find that you can’t handle the pressure, a legitimate debt management company may be a good alternative to a more drastic step like bankruptcy, Travillian says. You can find a counselor in your area at NFCC.org.