Money Management Series: Rule #4

Welcome back to the Money Management Series! This week’s topic will explore the debt aspect of money management. According to NerdWallet, the average American household with debt carries $15,355 in credit card debt and $129,579 in total debt (think student loans, mortgages, and car loans). If you aren’t necessarily a household yet, you may have half of that, if not more. Whether you are thousands of dollars in debt or barely using one credit card, managing your money includes dealing with debt.   Continue reading to learn more.

How to Deal With Debt

If you can’t deal with your debt (whether by choice or by situation), then you aren’t properly managing your money. Debt can be extremely draining. Just knowing that every month a bill for money borrowed is coming, along with a nice interest charge, can put you in a bad mood. The first step in dealing with debt is changing your mindset.

You have debt, accept it and deal with it. Ignoring it or pretending it’s not there will not help now or in the long run. Accept your debt and then make it a point to understand it. Debt should no longer be referred to as a negative, but a challenge that you are ready to take on. Read Where to Start When Dealing With Debt for more on accepting and understanding your debt.

How to Manage Debt

After accepting and understanding your debt, you need to start managing it. The best way to manage debt is to stop using it! Get yourself on a budget that allocates your income directly to all of your bills, expenses and recurring charges. Paying bills on credit cards should no longer be an option. In fact, refraining from using credit cards is the best way to go. Once you know that you will not be adding any more debt to your plate, you can start paying it down.

Don’t worry about how long it will take, time flies anyways. Put any extra money you have into paying down your debt. Start with debts with the highest interest rate, because those are costing you the most. If you have a few debts with low balances, try knocking those out in one go, then focus your efforts on the higher balances.

How to Manage Your Money When You Have Debt

The trap that most people fall into is thinking that their income will cover their credit card spending, on top of regular expenses. Thanks to taxes, paycheck deductions and unavoidable bills, your net income is not as large as you think. If you can cover all of your living expenses and general bills with just your income, you are in good shape. When debt comes in the picture, it gets much harder.   When you have debt, a budget is mandatory.

Use it to see what real income you have and what expenses you’re required to pay. Make sure those expenses are paid with your income and the rest goes to paying off your debts. You need to keep a strict eye on excess spending when you have debt. You don’t want to be one of those women rocking a Gucci bag with a secret $10,000 credit card bill.

Getting Out of Debt

Getting out of debt is not impossible, in fact, it’s very doable. It just takes time, discipline and determination. Remember to keep a positive mindset. Congratulate yourself when you make small victories (for instance, paying triple the minimum payment). The small victories will add up over time.

If you’re in your 20s, it’s hard to stay focused, we know, but your future self will thank you. Include $25-$50 a month for fun spending. This amount is small enough to keep you focused on your debts, but large enough to allow you a Starbucks or lunch with a friend. Get yourself on a debt repayment plan. Let CGS Founder Raya help! She creates budgets to help you use your income to get out of debt, you just have to be in control of your spending. Check out the Start Your Budget page for more information.


Acknowledging, understanding and creating an action plan for your debt is a key for effective money management. Use the financial resources you have to start knocking out your debt. Stay focused and disciplined, even when it’s tough. You can do it! You can remove yourself from the statistics! Have you come up with a plan to get out of debt? Have you recently gotten out of debt? If so, how did you do it? Do you have any advice for other women with debt? This is important, so let’s speak up about it!

-The CGS Team

Check out other Money Management Series Posts:

Money Management Series #1: Budget Your Money

Money Management Series #2: Set Financial Goals

Money Management Series #3: Get Specific About Saving

Money Management Series #4: Deal With Debt

Money Management Series #5: Plan for the Future



3 thoughts on “Money Management Series: Rule #4”

  1. I have definitely had to deal with debt in the past and it’s very draining! Just knowing that it doesn’t go away overnight can make one feel negative. When I made the choice to pay off my debts, I stopped using my credit cards. Even if it meant not buying anything until my paycheck came, I didn’t use them!

Leave a Comment

Your email address will not be published. Required fields are marked *

19 + 7 =

Related Posts