5 Steps to manage debts yourself - What you should or should not do

DIY Debt Management

A debt management plan is an agreement between the debtor and the creditor for a reduced monthly payment plan. You can have a lower monthly payment plan in essentially 2 ways:

  • Through a professional organization
  • By initiating a negotiation process with creditors

Steps to manage debts on your own

Like several other DIY jobs, some people are more than willing to negotiate with creditors on their own. If you're one of them, then have a look at the next section to know how you can manage debts on your own.

1Take action before it is too late:

It is best to take action before your debt problems become worse. The longer you wait, the greater will be your problem. Start assessing your financial problems first. You need to know how bad your financial problem.

Sit down with a pen and paper. Gather all the letters you've received from your creditors. Go through the financial statements and note down how much you need to pay to get out of debt. List the names of creditors, the interest rate they're charging, and the minimum amount you have to pay each month.

2Check out your affordability:

Once you've realized how much you owe to your creditors, your next task is to determine your affordability. You can do that by calculating your income and expenses. Calculate every penny that you spend in a month. Sometimes, people just forget to calculate various miscellaneous expenses they make in a month. Make sure you don't do that mistake.

You already know how much money you make in a month. Now you know how much you spend every month. This will make you realize if your spending behavior has to lead you to your current problems. You need to know where your money is going and how much you can pay in order to get out of the troubled financial waters.

3Adopt a new spending diet:

Money becomes more precious when your financial life can crash anytime. Pay only for the necessities (your basic needs), followed by paying off state and federal taxes. Once you've paid for these things, focus on your debt payments. Create a spending plan that will help you take care of your necessary, planned, and unplanned expenses.

4Take care of your debts:

You won't be able to eradicate your financial worries just by making minimum payments. You have to pay something extra to your creditors. Explore new ways to make money. You can do that by selling items you don't need anymore. Next, contact your creditors and find out if they're willing to cut down on the interest rate you're paying. If you can explain your financial situation convincingly, then your creditors may agree to revise your interest rate as per your affordability. Once your interest rates are reduced, you can start sending the revised amount to your creditors every month.

5Opt for debt snowball or avalanche:

You've 2 options left when the negotiation process is not successful. Your first option is to start paying down your debts from the smallest to the biggest amount. This is known as the snowball method.

Your second option is to start paying down your debts from the highest interest rate to the lowest interest rate. It is more popularly known as the avalanche method. In both methods, you need to make at least the minimum payments to your creditors.

Budgeting is an integral part of debt management. It will be hard for you to go on a spending diet and send monthly payments to creditors without a budget. Use any free budgeting application to create a customized budget plan for you. This will help you stay on the right financial track.

DIY debt management - What you should never do

  • Ignoring collection calls and notices
  • Increasing expenditures and lowering income
  • Overlooking your monthly budget
  • Not making monthly payments to creditors
  • Accepting new loan offers from lenders

Do it yourself debt management - What you must do

  • Take prompt action. Don't hesitate when it comes to debt problems
  • Decide the priorities of your life as per your financial situation
  • Allocate extra money for debt payments
  • Read monthly statements so as to be sure that your creditors have received payments
  • Check your credit report from time to time


It can be a little intimidating to tackle collection calls when you're trying to manage debts on your own. Be strong even when you're under severe pressure from creditors and if you can't, then consult a credit counselor in your area.