We have heard of the two methods of paying off debt: The “Debt Snowball” where you pay the debt with the lowest balance first and the “Debt Avalanche” where you pay the balance with the highest interest first. It can be very easy to look at all that you owe and become quickly overwhelmed by what is owed but it is about perspective. Instead of looking at what is owed as a huge burden, look at it as goals to achieve.

Do not focus on every single debt at once!

  • You may have heard of the saying: “How do you eat an elephant?! One piece at a time.” One of the biggest mistakes many of us make is we look at everything all at once and when we do that we begin to suffer through A.I.N. (Panic, Anger, Insecurities, and Negative thinking/actions). We instantly panic and worry about the debt. We become angry every time there is something that reminds us about the debt. This can be the regular mail, email, and phone calls from bill collectors. With having insecurities from the debt, we feel ashamed and beat ourselves up. We lose confidence in our ability to take care of ourselves and household. When all that sets in, it is easy to dive into negative thinking such as indifference or having a complete defeatist attitude. No matter how much we panic, get angry, beat ourselves up, and throw up our hands and give up, the debt did not go away. The first thing is to look at the debt one at a time. Realize that it is owed but understand that what is owed will be taken care of.

Never be afraid or ashamed to negotiate payment arrangements.

  • Sometimes we do not like to talk to the lender or bill collector due to feelings of being afraid or ashamed. Build a relationship with your creditors and collectors. Life does happen and it is better to get a handle on things before they become overwhelming. In negotiating, do not become emotional. It is better to get the creditor/collector to trust you and want to work with you than to not want to work with you at all. When the arrangements are made and everything has been agreed, document everything, ask for a confirmation from them and you send your own confirmation. Transparency and trust are key!


  • When paying the bills you want to prioritize what comes first. Mortgage/Rent should always be first. You have to keep a roof over your head. Falling behind on your mortgage or rent can lead to foreclosure or eviction. A foreclosure or eviction can have a very serious negative impact on your credit score. Once mortgage/rent is taken care of take care of the utilities. Some ways to help keep the utilities down is reduce the usage of energy and water, seek budget billing, or look into utility assistance programs like the United Way. Again, when utilities may seem to be a bit high, see step 2. After the house is taken care of, take care of your vehicle. Many need their vehicle to get to and from work. If your auto loan payments are too high, negotiate extended terms for the loan that can maybe lower your payments. Your interest will likely increase but it is better than the alternative which is a repossession. Another idea to save your vehicle is to refinance or trade for a more affordable model.

Do not move up your debt priorities because a creditor or collector threatens legal action.

  • Something to keep in mind, loans without collateral are low priority. This means most credit card debt, medical debts, retail, appliances are low priority. There is rarely if anything that the creditor/collector can do to hurt you in the short term. Typically, most make the threat and it is never carried out. To avoid this altogether, remember to negotiate beforehand. Also it is important to remember that efforts/attempts to collect a debt should not move up your priorities either. Yes, some creditors/collectors can be aggressive in forcing you to pay a debt that could be paid later or last. You have to as in step 3 prioritize and stick to it.

Debt consolidation and payday loans are never the answer.

  • Debt consolidation is simply a loan that takes all of what you owe and put it into one payment. This sounds good at first. What really happens is that the life of your loans will extend causing you to remain in debt longer and your low interest rate will gradually increase over time. There are even some companies who offer to settle your debt for an upfront fee and with monthly payments to negotiate with your creditors/collectors to reduce what you owe. What really happens is they just take your money and dispute items on your report over and over and your credit score plummets. Payday loans simply do not help at all. They do nothing to help your credit score.

Our financial wellness coach, Reginald Garth is available Mon-Fri at the Office of Financial Empowerment to answer any questions, provide counseling and resources you need to help you overcome the P.A.I.N. of debt. 314-613-3196 or reginald.garth@operationhope.org