Take charge of what you owe with clarity and confidence
Debt can be both a useful tool and a source of stress. Whether it’s student loans, a mortgage or a credit card balance, most of us will carry some form of debt at different points in our lives. The key is to manage it intentionally; understanding what you owe, developing a repayment plan and making small, consistent choices that lead to long-term freedom.
Debt management is part of overall well-being. By building awareness, setting priorities and seeking support when needed, you can regain control, reduce anxiety and create more space for your goals.
Understanding good debt vs. bad debt
Not all debt is harmful. In fact, some debt can help you build a stronger financial future.
Good debt supports long-term growth or asset building. For example: Education, a home purchase, or starting a business. These investments often have the potential to increase your income or equity over time.
Bad debt refers to borrowing that costs more than it earns. High-interest credit cards, payday loans or impulse financing can lead to cycles of repayment that limit your ability to save or invest.
UW’s financial partners remind us that not all debt should be eliminated immediately. Instead, focus on the highest-interest and least productive debt first while maintaining minimum payments elsewhere. Over time, this approach preserves your credit health and frees up resources for savings or investing.
Taking inventory of what you owe
The first step to managing debt is to see the full picture. List every balance you owe; student loans, auto loans, credit cards, or personal lines of credit and include the interest rate, minimum payment, and due date for each.
Many people find it helpful to use a spreadsheet or a tool like Fidelity’s Debt Reduction Calculator to visualize progress. Seeing your total obligations laid out clearly can reduce anxiety and reveal which accounts to prioritize.
Review your debt list quarterly, especially if your financial circumstances change. Awareness is the foundation of improvement.
Choosing a repayment strategy that fits you
Once you know what you owe, choose a repayment method that matches your motivation style.
The Snowball Method
Start with the smallest debt first, while paying the minimum on all others. When that first balance is gone, apply its payment to the next smallest. This approach creates quick wins and builds momentum, perfect for those motivated by visible progress.
The Avalanche Method
Focus on the debt with the highest interest rate first to save the most money long-term. Once the top balance is paid off, move to the next. This method is mathematically efficient but requires patience, as early wins may take longer.
Reducing costs and avoiding new debt
As you pay down balances, aim to limit new borrowing. Consider these strategies for reducing interest and accelerating repayment:
- Refinance or consolidate loans. If you have high-interest student loans or credit cards, explore refinancing options through a trusted lender like a credit union. Lower rates mean more of your payment goes toward principal.
- Negotiate rates or payment terms. Many lenders will temporarily reduce interest or pause payments if you reach out early about hardship.
- Transfer high-interest balances. Moving a balance to a 0% introductory card can save interest if you’re able to pay it off within the promotional window. Be sure to read the fine print.
- Automate payments. Late fees and missed payments add up quickly. Automation helps you stay consistent and protects your credit.
Even small changes can create meaningful results. Lowering your average interest rate by just one percent can save hundreds of dollars per year.
Balancing repayment with other financial goals
It’s tempting to throw every extra dollar toward debt, but balance matters. Continue contributing to your emergency fund and retirement plan while paying off balances. This ensures that one unexpected expense won’t derail your progress or push you back into debt.
UW employees can access guidance through TIAA, Fidelity, and the UW Employee Assistance Program (EAP), which offers confidential financial consultation. These resources can help you map out a sustainable strategy that supports both repayment and resilience.
The emotional side of debt
Managing debt isn’t just a financial challenge, it’s an emotional one. It can bring feelings of guilt, stress or even shame. But debt is a tool, not a personal failure. What matters is that you’re facing it with clarity and intention.
Celebrate small victories. Every payment made is progress toward freedom. Consider tracking milestones visually to stay motivated. Give yourself grace as you learn, adapt and build stronger habits over time.
Watch and learn
Find a variety of webinar recordings in our Financial Education playlist on YouTube.