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Debt Management

Getting into debt is easy, but getting out is not. When considering new debt you have to think about the impact it will have on your present and future financial situation. Some questions to ask yourself are: Do I really need this loan? Can I afford the loan? How much will I pay in interest? Making smart decisions about debt management is essential to a sound financial future. Here are some tips to help you manage your debt:

  • Think before you borrow.
  • Know your options.
  • Consider student loans after researching sources of financial aid.
    • Borrowing costly alternative loans (private loans) without maximizing all of your federal eligibility can cost thousands of dollars over the life of the loan.
  • Create a monthly budget and make a plan to reduce your debt.
  • Do not fall into the minimum payment trap.
    • Paying only the minimum payment lengthens your repayment period and increases the amount of interest you pay.
  • Establish a good credit history by always paying on time.
  • Borrow only what you need.
    • An easy way to keep your student loan debt at an acceptable level is to borrow the minimum you need to cover your educational expenses. Just because you are eligible for a certain loan amount does not mean that you have to borrow the full amount. You have the option to decline or reduce your loan eligibility amount.
  • Debt Repayment Methods

    Snowball Method — Pay off debts from smallest to largest, regardless of interest rate.

    • Pro: Immediate feeling of victory
    • Con: You will pay more in interest compared to the debt stacking method


    Debt Stacking —
    Pay off the debt with the highest interest rate first, regardless of amount.

    • Pro: You save money on interest payments
    • Con: It may take you a longer time to pay off debt compared to the snowball method
  • 10 Warning Signs of Too Much Debt
    • You've drained your savings trying to pay off your debt.
    • You only make the minimum payment on your credit cards each month.
    • You pay bills late because you don't have any money.
    • You have at least one credit card that is near, at or over the credit limit.
    • You continue to make more purchases on your credit card(s) while trying to pay it off.
    • You use cash advances from your credit cards to pay other bills.
    • You have been denied credit.
    • You don't know how much total debt you have.
    • Your finances cause you to lose sleep at night.
  • Debt Management Resources

    If you are feeling overwhelmed with debt, try contacting your lender about repayment options, consider consolidation and/or contact the National Foundation for Credit Counseling. For online resources visit: