Staying One Step Ahead of Debt

Like a lot of people, there have been times during my adult years when I have struggled with debt. While I have never resorted taking out a payday loan, or extended loans as is often the case with that racket, I have taken other drastic measures.

Spent Looking For Change | A Look at Debt, PayDay Loans and the Unbanked

Once in my twenties I utilized the services of a pawn broker to help cover a credit card bill and on two occasions, when carrying debt on multiple credit cards began to take its toll, I turned to credit counselors and debt management programs.

Credit Counseling

While they can vary a little, debt management programs all generally work the same way. The client provides the counselor with all the relevant information on their credit cards (e.g. banks, account numbers, balances, etc.). The counselor works with each creditor to lower the interest rate and/or the amount due. With the agreements in place, the accounts are closed/suspended and the repayment plan is started. The client makes one payment to the credit counseling service, who in turn make the agreed upon [lowered] payments to the creditors, and of course, take a service fee for their efforts.

While the plans can work, obviously it is not a long-term solution. An individual can’t turn to a credit counseling service and a debt management plan every few years after they’ve paid off a set of credit cards and then run up debt on new ones.

Effectively Managing Debt

My experience has led me to conclude there are three elements to effectively managing debt: learn to live on less than you earn, maintain a robust emergency fund, and develop a method for managing credit cards.

The first element is pretty straight forward. We have become a nation of hyper-consumers and too many people spend money they don’t really have, via credit cards, to buy stuff they don’t really need. The solution? Accept that you have to spend less than you earn. Period.

Most are familiar with emergency funds and the role they play. Simply put it is a cash account that is used only in the event of an emergency, to fill critical financial gaps, or meet unexpected expenses (e.g. car repairs, hospital visits, etc.). It is immediate access to cash that allows you to take care of unforeseen circumstances without impacting the money you have committed to saving and investing; and by having such an account, you will not have to turn to credit cards when faced with an unexpected expense, or multiple expenses at once as so is often the case. We all know that bad things happen in threes.

Car Repair

With respect to credit cards, some like Dave Ramsey believe the best way to ‘manage’ credit cards is not to use them. Mr. Ramsey opines, “If you ‘have to’ use plastic, I suggest a debit card. I use them for travel and the occasional convenience of ordering something over the Internet or phone. Other than that, I use cash.”

Final Thoughts

Not using credit cards at all is certainly a great approach. However, if you’re like me, you maintain at least one credit card. So what’s my approach to managing my credit cards? I employ a two-pronged approach. First, making payments on my credit card – I only use one on a regular basis – is my second most important priority, right behind paying myself (automatic contributions to my Thrift Savings Plan and brokerage accounts) first. Second, I pay off the balance twice each month, on the 5th and 20th. I simply open up the applicable app on those days and clear the balance.

Credit Card App

There was a time when I would pay off the balance at the beginning of each month. What I found however, is that inevitably various factors would conspire against me and I would not pay off the entire balance one month. And of course that would make it harder to pay off the entire balance the next month … a dangerous snowball would form. By paying off the balance twice each month I don’t give that snowball a chance to form.


Blogger-in-Chief here at RetirementSavvy and author of Sin City Greed, Cream City Hustle and RENDEZVOUS WITH RETIREMENT: A Guide to Getting Fiscally Fit.


  1. I definitely agree that paying off your balance multiple times a month is smarter than paying off the lump sum once a month! It hurts so much more to do the latter and definitely can turn into a huge mess. Great post

    • Thanks for stopping by and sharing your thoughts, my friend.

  2. We each have a Visa. Mid month I pay the balances in total. We’re usually a month ahead. Right now I know nothing will be due until December. I like your method better because there’s no chance of messing up. Thanks for the tip.

    • It’s worked well for me. I wish I had adopted the practice sooner and saved myself some grief 😄

  3. I think you hit the nail on the head James, especially with your three tips. It’s not rocket science, but in the daily hustle-and-bustle of life it’s easy to slip up. And if you’re not careful, those can lead to expensive and ongoing habits. But with your financial best practice in mind readers should be headed in the right direction. Thanks again for sharing and hope you had a nice weekend.

    • Thanks for the great feedback, my friend.

  4. I like the idea of clearing a CC balance twice per month – great tip!

    • Yep, paying off the card twice a month provides greater control and makes it harder for the debt to spiral out of control. Too often, money that people say they are going to commit to paying off a credit card ends up being spent elsewhere and the cc debt ends up being carried forward into the next month, and the next month …

      Thanks for stopping by, my friend.

  5. I pay my credit card twice a month! Every time I get paid, I pay it. I make all my purchases on a credit card with a good cash reward. But it still feels weird, so I literally cannot wait to pay it when I get paid. I also don’t distinguish between cash and using my credit card on my YNAB budget, so the faster I can pay it, the better I can stay on track…

    • “But it still feels weird, so I literally cannot wait to pay it when I get paid.” Good stuff.

      It does feel good when you take actions to keep debt at bay and paying off existing credit card debt twice a month – such as when you get paid as you note – works well.

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