The new year is a great time for a fresh look at our personal finances. But, if you find yourself feeling the stress from juggling too much debt, now may be the time for a fresh plan to tackle that debt.

Having a goal, facing your balances, refreshing your budget, creating a repayment plan and being proactive can help you take charge of your debt and financial future. Debt doesn’t appear overnight and paying it off won’t happen overnight either, so be patient.

Here are some financial steps to help get your debt under control in the new year.

Know Where You Stand

Knowing what you owe is the first step forward. Make a list of all your outstanding debts and the people and organizations you owe money to including credit cards, auto loans, personal loans, student loans, medical bills, legal bills, etc. List out who you owe, how much you owe, interest rates, if applicable, and how much you are currently paying.

Stop Accumulating Debt

Reduce your temptation to create more debt by taking a break from your credit cards or taking out any new loans, even if money is tight. Avoid payday lenders who often charge extremely high interest rates making it very difficult to get out of that debt cycle.

Assess Current Financial Situation

Update or create a budget. Look at all your income sources – paycheck, money from side jobs, etc. List your current expenses – rent/mortgage, food, transportation, cell phone, etc. Town & Country’ downloadable budget worksheet can help with this. See where you can reduce spending to free up money to put towards debts. Streaming services, take-out, secondary vehicles may all be places you can find savings. You may need to consider getting a second job or selling assets to have more money to put towards debts.

Prioritize Savings

Building a savings cushion will help you have money available for unexpected or periodic expenses like car repairs or birthday gifts and can reduce reliance on credit cards. Even if you can just set aside $10 a week, it will add up over time.

Paying Down Debt

There are a couple of debt repayment methods to consider. Choose the one that works for you.

  • Roll Up – Dedicate a specific amount of money to paying debt. The amount does not change as debt is repaid. Instead, the same amount is reallocated among remaining debts.
  • Snowball – Pay off the smallest debts first and gradually take on larger debt amounts. This can be motivating to pay off entire debts sooner.
  • Avalanche – Focus on paying high-interest debts before lower interest debts. This method will likely save more money in interest charges over time.

Depending on your situation, you may be able to consolidate high interest debts into one loan with a lower interest rate and better term.

Reaching Out to Creditors

Once you know how much money you have to put towards your debts, prioritize the people and organizations you owe and determine what you can pay each month. If you are behind on any debts, be proactive and reach out for help. Most creditors, including collections agencies, are open to creating workable payment arrangements.

If you would like to talk with someone about creating a workable budget or paying off debt or have other financial questions, contact us at, or call 800.649.3495.

View all articles