How to Manage Debt Without Falling Further Behind

Rising interest rates make credit card debt harder to manage. However, solutions exist, ranging from DIY strategies to professional assistance.

You make the payments. The debt barely moves. Then the interest piles on, and you’re right back where you started. If this sounds familiar, you’re not imagining it — and you’re not alone.

Americans collectively hold $1.182 trillion in credit card debt, according to the latest data from the Federal Reserve. Roughly 11% of credit card accounts make only the minimum payments. That means millions are struggling to juggle high-interest bills, and with average APRs now over 22%, most of what you’re paying goes straight to interest, not the balance.

But there’s a way forward.

This guide shows you how to manage debt on your terms. You’ll learn how to create a workable budget, explore payoff strategies like the debt snowball and debt avalanche, and check your debt-to-income ratio (DTI). If you’re past the point where DIY methods work, we’ll walk you through how a nonprofit debt management program can help you consolidate what you owe and get back on track.

What you’ll learn in this guide

  • How to create a budget that frees up cash to pay down debt
  • The difference between the debt snowball and avalanche methods — and how to pick one
  • Why your debt-to-income (DTI) ratio matters, and how to calculate it
  • When DIY debt payoff stops working — and signs it’s time to get professional help
  • How a nonprofit debt management program can lower your interest and simplify repayment

Step 1: Get real with your budget

You can’t manage debt if you don’t know where your money’s going. That’s why every debt repayment plan — including a debt management program — starts with a clear, accurate budget.

This step isn’t about small tweaks. It’s about understanding your income, your obligations, and whether there’s room to pay down what you owe.

Start with your take-home income

Add up your monthly income after taxes. Include all sources: paychecks, side jobs, government benefits, child support — anything that helps cover your bills.

List every monthly expense

Break your spending into:

  • Fixed expenses – rent or mortgage, utilities, insurance, transportation, minimum credit card payments
  • Variable expenses – groceries, gas, household supplies, personal care, and more

Calculate your cash flow

Subtract your expenses from your income:

  • If you’re spending more than you earn, you may be relying on credit to fill the gap
  • If you have money left over, that’s what you can use to reduce your debt

Bi-weekly payment calculator

Switching to a bi-weekly payment schedule can help you pay off loans faster and save money on interest charges. Instead of making monthly payments, you pay every other week.

Your payments are cut in half. However, because you make 26 payments each year, you end up paying off debt faster than you would with 12 monthly payments. This calculator helps you evaluate the benefits of moving to bi-weekly payments.

Identify areas to cut back

Your goal is to free up a consistent amount of dollars each month for repayment, whether through a DIY method or a debt management plan. Temporary cutbacks can help you get there faster.

Step 2: Explore your debt repayment options

Once you’ve freed up room in your budget, it’s time to decide how to apply it. Here are the most common DIY repayment strategies people try before turning to structured support:

Debt snowball

Focuses on your smallest balance first, giving you quick wins that build motivation. You’ll pay minimums on all debts, but allocate extra payments toward the debt with the lowest balance. Once that’s paid off, you “snowball” that payment into the next.

Debt avalanche

Targets your highest-interest debt first, helping you pay less in the long run. It’s the most efficient on paper, but requires more patience, and enough room in your budget to make larger payments.

Consolidation loans and balance transfers

If your credit is strong, you may qualify for a personal loan or a 0% balance transfer card to consolidate your debts. But with high utilization or missed payments, approval is unlikely, and rates may not be better than what you’re already paying.

These methods can help early in the debt cycle. But if you’re carrying five or more high-interest credit cards, falling behind on payments, or seeing balances grow despite your efforts, DIY may no longer be enough. That’s when it’s time to consider a nonprofit debt management program (DMP) — a structured way to pay down your unsecured debts in full, but with reduced interest and one affordable monthly payment.

Step 3: Check your debt-to-income ratio

Your debt-to-income (DTI) ratio helps you understand whether your current repayment strategy is sustainable and whether you’re a candidate for professional help.

How to calculate DTI

Add up all your monthly debt payments, including:

  • Credit card minimums
  • Auto loans
  • Student loans
  • Personal loans
  • Mortgage or rent (for your own reference)
  • Any other required debt obligations

Divide that by your gross (pre-tax) monthly income, then multiply by 100.

Example:
$2,000 in total debt ÷ $4,500 in income = 0.444
 → DTI = 44%

Step 4: Know when it’s time to ask for help

If your debt-to-income ratio (DTI) is over 41%, it’s a strong sign that your debt has outgrown what you can realistically manage through budgeting or DIY payoff strategies. At that point, your minimum payments may only be covering interest — not the balance itself — and adding another solution like a balance transfer or personal loan may no longer be realistic or available.

That’s where a nonprofit credit counseling agency can step in.

What to expect from credit counseling

You’ll speak with a certified counselor who will:

  • Review your income, expenses, and debts
  • Help you create a workable budget
  • Explain whether you qualify for a debt management program

The consultation is free and won’t affect your credit.

If you’re eligible, you’ll enroll in a DMP that:

  • Combines your unsecured debts into one monthly payment
  • Lowers interest rates
  • Sets a clear payoff timeline (usually 3 to 5 years)
  • Requires no loan or credit approval

You still repay your debts in full, just with less interest and fewer moving parts.

How a DMP Works

A DMP consolidates your unsecured debts into one monthly payment, typically with reduced interest rates negotiated through a nonprofit credit counseling agency. You won’t take out a new loan, and your credit score doesn’t need to be perfect to qualify.

Here’s what you can expect:

  • One fixed monthly payment based on your budget
  • Lower interest rates — often reduced to 6% or less
  • A clear payoff timeline, usually 3 to 5 years
  • Direct payment distribution to your creditors from the agency
  • Continued support from certified credit counselors

You still pay back the full amount you owe — just under better terms that actually make progress possible.

What debts a DMP includes

Only unsecured debts can be enrolled in a DMP. This includes:

What a DMP does not include

DMPs cannot include secured debts like:

  • Auto loans
  • Mortgages or home equity loans
  • Student loans (federal or private)
  • Tax debt, child support, or court judgments

Even though these can’t be consolidated, a DMP can still make them easier to manage by freeing up room in your budget.

Next steps

If you’re making minimum payments, watching interest pile up, or managing five or more high-balance credit cards, it’s time for a different solution.

A debt management program could be your way out.

You’ll make one monthly payment. You’ll likely pay less in interest. And you’ll finally have a realistic plan to get out of debt, without taking out another loan.

Don’t wait until it gets worse.
Speak with a certified credit counselor today. There’s no cost, no pressure — just a clear path forward.

Do you still have questions about how to manage your debt effectively? Ask our team of certified financial coaches to get the answers you need.

Ask a Question